What if £200,000 have not been spent?

user29 · Post by **user29** » Mon Sep 14, 2015 8:32 pm

I came to the UK on Entrepreneur Tier 1 category in 2013. In few months, I leased out a closed down premises, obtained A5 restaurant license / permission on it, renovated and installed equipment and then over a period of a year have hire 4 full time staff.

All of this was done step by step, not in one go, over a period of two years since September 2013 to date. In so doing, I have spent just over £100,000 in total. Now the business is self-sustaining; even unusual expenses like marketing or advertisements are also done from the revenue generated from sales.

I have no intention of expanding into another branch or develop another business due to the time this one requires in running it. Also, the lease is for 25 years and I don't have a right to buy and the freehold owner isn't willing to sell the freehold of the premises to me either.

So, I don't see myself spending another £100.000 (totalling a spend of £200,000) as required for my extension application next year.

My question is to ask the forum users here about if they have been in similar situation or what happened to those people who did not spend the whole £200,000 in a business and applied for the extension in the Tier 1 Entrepreneur status.

Many thanks in advance.

tiredoftiers · Post by **tiredoftiers** » Mon Sep 14, 2015 9:03 pm

Those people would either pack their bags or arrange themselves another tier to be tied up with!
In order for you to qualify for the extension you need to make sure you have invested the minimum 200k a penny less has a potential causing your application being refused.
safe and sound way investing rest of money will be buying property that to be bought by the business you establish or take over opening another food business in a premises you own wont be bad at all.
If I would hv been in same situation i would invest this way

naveediiqbal · Post by **naveediiqbal** » Mon Sep 14, 2015 10:23 pm

user29 wrote:I came to the UK on Entrepreneur Tier 1 category in 2013. In few months, I leased out a closed down premises, obtained A5 restaurant license / permission on it, renovated and installed equipment and then over a period of a year have hire 4 full time staff.

All of this was done step by step, not in one go, over a period of two years since September 2013 to date. In so doing, I have spent just over £100,000 in total. Now the business is self-sustaining; even unusual expenses like marketing or advertisements are also done from the revenue generated from sales.

I have no intention of expanding into another branch or develop another business due to the time this one requires in running it. Also, the lease is for 25 years and I don't have a right to buy and the freehold owner isn't willing to sell the freehold of the premises to me either.

So, I don't see myself spending another £100.000 (totalling a spend of £200,000) as required for my extension application next year.

Try discussing capitalizing employee and other expenses with an experienced accountant if that may help in your case

My question is to ask the forum users here about if they have been in similar situation or what happened to those people who did not spend the whole £200,000 in a business and applied for the extension in the Tier 1 Entrepreneur status.

Many thanks in advance.

10020132 · Post by **10020132** » Tue Sep 15, 2015 12:04 am

I am in the same situation as I opened restaurant and its running well and i had to spend some more money for my extension. So i started another business in partnership with another guy. It was my money and his work (effort) but you can only do this if you trust other person fully

GLL · Post by **GLL** » Tue Sep 15, 2015 2:21 pm

In your case I would suggest investing the remaining funds in another existing business. This way you will comply with the visa requirements and will have already a team in place that would run the business, so you will not need to worry about diverting much of your attention from the first business.
We have a number of good businesses looking for investments, so if you want to consider this option, feel free to contact us at Email

Moderator Edit : removal of company email as advertising is not permitted.

AANA · Post by **AANA** » Tue Sep 15, 2015 3:36 pm

Directors loan to business is the simplest and safest solution.

tiredoftiers · Post by **tiredoftiers** » Tue Sep 15, 2015 7:26 pm

sorry ANNA can you please come out a little more on this he sofar has invested 100k and for the rest of investment he has to have remaining 100k in an account and source is director's loan ... and he meets the requirement that money has been invested??

AANA · Post by **AANA** » Wed Sep 16, 2015 7:33 am

Hi TiredofTiers

He can give his business an additonal £100,000 non secured directors loan that sits in his business account to use when and if required.

This would mean £100,000 actual investment that has been spent and another £100,000 in cash in his business account given by himself as he is a director to his business.

The point is that he would have to put an actual cash amount into his business account to qualify, your/his accountant will be able to advice regards this.

Hope this helps

tiredoftiers · Post by **tiredoftiers** » Wed Sep 16, 2015 12:24 pm

this has been a phenomenal news that money simply in Business account transferred from director's account are considered invested because he lent his company that money! Great

AANA · Post by **AANA** » Wed Sep 16, 2015 7:54 pm

Hi TiredofTiers

It's not simply transferring from a directors account into a business account, please do not make that mistake, you have to have a legal document in place before it will be recognized as an actual investment.

it's actually written in the Tier 1 Entrepreneur Visa guidance notes

Evidence to show how much has been invested

132. You must provide all the appropriate specified documents needed to establish the amount you
have already invested from the following list.

v. Audited accounts

vi. Unaudited accounts and an accountant’s certificate of confirmation

vii. Director’s loan
If you have made the investment in the form of a director’s loan, it must be shown in the
relevant set of accounts provided, and you must also provide a legal agreement, between
you (in the name that appears on the application) and the company.
This agreement should show:
 the terms of the loan;
 any interest that is payable;
 the period of the loan; and
 that the loan is unsecured and subordinated in favour of third-party creditors.
If it is not clear from the information provided that the loan is unsecured and subordinated
in favour of third-party creditors, we will not accept the loan for the award of points.

tiredoftiers · Post by **tiredoftiers** » Fri Sep 18, 2015 2:08 pm

yours interpretation or whoever did this for you is your way. it is not a form of invested money !!

you should consult it with more experienced personals on investments and immigration regarding this ! especially those who have gone through extensions.

summer69 · Post by **summer69** » Sat Sep 19, 2015 5:13 pm

summer69 · Post by **summer69** » Sat Sep 19, 2015 5:31 pm

summer69 wrote:.

I have edited my previous reply since I personally am not satisfied with the two explanations specified on the Tier 1 Entrepreneur Extension policy guideline on the context of awarding points and not awarding points for Director's Loan. here's the link and someone might explain it better:
https://www.gov.uk/government/uploads/s ... 9_2015.pdf

AANA · Post by **AANA** » Sun Sep 20, 2015 12:26 am

Hi Summer69

The link you have provided for the policy guidance pdf is still the same as previous versions regards directors loan. It is at para 94.. part3.

I have given my interpretation but as it is a potential life changer in that proof of investment is required, please do get independent legal advice from a qualified solicitor who specialises in immigration policy or an accountant who is up to speed with tier 1 policy.

I have personally opened 3 business's while in the UK, all under limited companies and my total investment to date is under £100k. I have spoken to my accountant at length regards the investment criteria and she has assured me on more than one occasion that a directors loan is the best way forward if i do not invest/purchase any new business's.

I will not waste/spend money in any of my business's when there is no requirement to do so.. as entrepreneurs we should be wise and actively looking for profits and opportunities.

Taking professional advice is part of the entrepreneur journey.

Good luck
Saleem

n8net · Post by **n8net** » Mon Sep 21, 2015 11:12 am

is n't para 94 applicable only for initial applications ? any 1 with prior exp. of going for EXTENSION with partially invested money with the rest in the business account in the form of Directors Loan ? can;t see any reference to this in the Policy Guidance ?

n8net · Post by **n8net** » Thu Sep 24, 2015 10:24 am

any1 ?

AANA · Post by **AANA** » Thu Oct 01, 2015 8:00 pm

Hi

Please read Para 96 and understand it's meaning. (apologies if i sound harsh)

96.The amount of money invested should not:
 include the value of any residential accommodation or property development, or property
management; or

 be in the form of a director’s loan, unless it is unsecured and is subordinated in favour of the third-party creditors.

i have underlined and put the word UNLESS in red... it means Directors Loan to a business is acceptable as long as you do it in the correct format, have an official document clearly stating that the loan is unsecured and is subordinated in favour of the third-party creditors.

So even in the guidance policy document it clearly says that a directors loan if followed and setup correctly is acceptable.

I hope that makes sense...

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What if £200,000 have not been spent?

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