Employee Requirements

Aaina · Post by **Aaina** » Wed Jul 17, 2019 3:37 pm

Hi,

I am seeking help on a few queries which I will post separately as per the topic.

Regarding 200 K investment, my dad has a tier 1 entrepreneur visa and will apply for the extension in the next year or so. He joined a business as a director and has transferred 150k(to start with) as a director's loan. In the first year company has had the expense of just 26k.

My key question is - with this rate he might just have an expense of 120-130K in the first three years after which he will apply for extension. So does the investment mean that he has to spend 150K on expenses or investment means that he has transferred money to the business as a director's loan? I doubt he can spend 200K in three years with the expense that is happening.

Please note I understand that he will put 50k more to make it 200k of directors loan.

Thanks
Aaina

Post by **zimba** » Wed Jul 17, 2019 10:49 pm

There is no requirement that the money needs to be spent before extension. The extension applicants will be scrutinised for genuineness and the business activity though

Aaina · Post by **Aaina** » Thu Jul 18, 2019 9:40 am

Thanks ever so much Zimba. I guess I was under the wrong impression of spending the entire money then.
My dad isn't withdrawing any salary out, and he has another director(who is not a tier 1enterpreneur) who is also not withdrawing any salary at the moment. But if this other partner does withdraw - will that be deducted from investment value?

Thank you
Regards
Aaina

Post by **marcnath** » Thu Jul 18, 2019 11:47 am

Aaina wrote: ↑
Thu Jul 18, 2019 9:40 am
Thanks ever so much Zimba. I guess I was under the wrong impression of spending the entire money then.
My dad isn't withdrawing any salary out, and he has another director(who is not a tier 1enterpreneur) who is also not withdrawing any salary at the moment. But if this other partner does withdraw - will that be deducted from investment value?

Thank you
Regards
Aaina

No, it won't

Aaina · Post by **Aaina** » Thu Jul 18, 2019 9:49 pm

Thank you so much:)

Regards
Aaina

Post by **CULLINAN** » Sat Jul 20, 2019 1:43 am

Wanted to share first hand experience:

I invested 200k in my company. Once the money hits your business account from your personal account the investment is done.

Having said that, the money should not be sitting there idle. As Zimba said, you will be scrutinised for genuineness and business activity as you have to pass the genuine entrepreneur test. As long as you have genuine activity, less or more, NOT necessarily you have to spend all the money.

I applied for my extension when I had only spent around 80k, applied for ILR when I had spent around 120k.. rest was still in the business bank account.

Also, I did withdraw minimum director salary through all 5 years and I did NOT top up. My investment was 200k and I took salary from the same amount. As long as the salary is justified e.g. someone withdrawing a salary of 100k a year will raise a red flag otherwise I dont see a problem with a director withdrawing salary.

Director and company are two different entities and the company has to pay for director’s salary to run the business. There seems to be an opinion that director cannot withdraw salary if the company is in loss and can only withdraw from the profit. My company was in loss all 5 years and I withdrew salary all 5 years and did NOT top up the 200k initial investment.

I was granted extension and ILR eventually.

Post by **marcnath** » Sat Jul 20, 2019 12:48 pm

tier11417 wrote: ↑
Sat Jul 20, 2019 1:43 am
Wanted to share first hand experience:

I invested 200k in my company. Once the money hits your business account from your personal account the investment is done.

Having said that, the money should not be sitting there idle. As Zimba said, you will be scrutinised for genuineness and business activity as you have to pass the genuine entrepreneur test. As long as you have genuine activity, less or more, NOT necessarily you have to spend all the money.

I applied for my extension when I had only spent around 80k, applied for ILR when I had spent around 120k.. rest was still in the business bank account.

Also, I did withdraw minimum director salary through all 5 years and I did NOT top up. My investment was 200k and I took salary from the same amount. As long as the salary is justified e.g. someone withdrawing a salary of 100k a year will raise a red flag otherwise I dont see a problem with a director withdrawing salary.

Director and company are two different entities and the company has to pay for director’s salary to run the business. There seems to be an opinion that director cannot withdraw salary if the company is in loss and can only withdraw from the profit. My company was in loss all 5 years and I withdrew salary all 5 years and did NOT top up the 200k initial investment.

I was granted extension and ILR eventually.

If you did not have sales income that would cover your salary, you can consider yourself extremely lucky to have got your extension and ILR.
There is no requirement to take salary from profits but it has to be taken from some other income (such as sales) and not the invested amount. That is very clear in the immigration rules.

Post by **CULLINAN** » Sat Jul 20, 2019 2:02 pm

marcnath wrote: ↑
Sat Jul 20, 2019 12:48 pm

tier11417 wrote: ↑
Sat Jul 20, 2019 1:43 am
Wanted to share first hand experience:

I invested 200k in my company. Once the money hits your business account from your personal account the investment is done.

Having said that, the money should not be sitting there idle. As Zimba said, you will be scrutinised for genuineness and business activity as you have to pass the genuine entrepreneur test. As long as you have genuine activity, less or more, NOT necessarily you have to spend all the money.

I applied for my extension when I had only spent around 80k, applied for ILR when I had spent around 120k.. rest was still in the business bank account.

Also, I did withdraw minimum director salary through all 5 years and I did NOT top up. My investment was 200k and I took salary from the same amount. As long as the salary is justified e.g. someone withdrawing a salary of 100k a year will raise a red flag otherwise I dont see a problem with a director withdrawing salary.

Director and company are two different entities and the company has to pay for director’s salary to run the business. There seems to be an opinion that director cannot withdraw salary if the company is in loss and can only withdraw from the profit. My company was in loss all 5 years and I withdrew salary all 5 years and did NOT top up the 200k initial investment.

I was granted extension and ILR eventually.
If you did not have sales income that would cover your salary, you can consider yourself extremely lucky to have got your extension and ILR.
There is no requirement to take salary from profits but it has to be taken from some other income (such as sales) and not the invested amount. That is very clear in the immigration rules.

What do you mean by sales income? I know two other people (family friend’s) who invested £200k and their company was in loss but they both withdrew director salary from the same amount. Both were granted extension and ILR also.

Post by **CULLINAN** » Sat Jul 20, 2019 2:25 pm

Do you mean sales turnover? Or by sales income you mean if a product’s purchase price is £X and sales price is £(X + 100) so the sales income is £100? even though the company is in net loss?

Post by **marcnath** » Sat Jul 20, 2019 3:10 pm

tier11417 wrote: ↑
Sat Jul 20, 2019 2:25 pm
Do you mean sales turnover? Or by sales income you mean if a product’s purchase price is £X and sales price is £(X + 100) so the sales income is £100? even though the company is in net loss?

Sales turnover - it does not matter if it is profitable or not. Sales is money coming in from someone other than the entrepreneur, so it is no longer the "invested" money.

Post by **CULLINAN** » Sat Jul 20, 2019 3:12 pm

marcnath wrote: ↑
Sat Jul 20, 2019 3:10 pm

tier11417 wrote: ↑
Sat Jul 20, 2019 2:25 pm
Do you mean sales turnover? Or by sales income you mean if a product’s purchase price is £X and sales price is £(X + 100) so the sales income is £100? even though the company is in net loss?
Sales turnover - it does not matter if it is profitable or not. Sales is money coming in from someone other than the entrepreneur, so it is no longer the "invested" money.

Yes I had high sales turnover.

Post by **marcnath** » Sat Jul 20, 2019 3:15 pm

tier11417 wrote: ↑
Sat Jul 20, 2019 3:12 pm

marcnath wrote: ↑
Sat Jul 20, 2019 3:10 pm

tier11417 wrote: ↑
Sat Jul 20, 2019 2:25 pm
Do you mean sales turnover? Or by sales income you mean if a product’s purchase price is £X and sales price is £(X + 100) so the sales income is £100? even though the company is in net loss?
Sales turnover - it does not matter if it is profitable or not. Sales is money coming in from someone other than the entrepreneur, so it is no longer the "invested" money.
Yes I had high sales turnover.

That explains why you got your approval.

Post by **CULLINAN** » Sat Jul 20, 2019 3:17 pm

marcnath wrote: ↑
Sat Jul 20, 2019 3:15 pm

tier11417 wrote: ↑
Sat Jul 20, 2019 3:12 pm

marcnath wrote: ↑
Sat Jul 20, 2019 3:10 pm

tier11417 wrote: ↑
Sat Jul 20, 2019 2:25 pm
Do you mean sales turnover? Or by sales income you mean if a product’s purchase price is £X and sales price is £(X + 100) so the sales income is £100? even though the company is in net loss?
Sales turnover - it does not matter if it is profitable or not. Sales is money coming in from someone other than the entrepreneur, so it is no longer the "invested" money.
Yes I had high sales turnover.
That explains why you got your approval.

Thanks for the clarification.

Aaina · Post by **Aaina** » Sun Jul 21, 2019 8:45 pm

Thank you so much for sharing your experience. This helps a lot:-)

Regards
Aaina

Aaina · Post by **Aaina** » Sun Jul 21, 2019 8:47 pm

I have a few queries on the ILR absence rules and a calculation sheet that marcnath has developed.
Do I start a new topic? Thanks

Regards
Aaina

Post by **zimba** » Sun Jul 21, 2019 9:10 pm

Start a topic in the ILR sub forum please

Aaina · Post by **Aaina** » Tue Jul 30, 2019 10:29 am

Thanks Zimba, will do now. Regards

Aaina · Post by **Aaina** » Tue Feb 25, 2020 4:09 pm

Hi,
Just wanted to know if we buy a Bed and breakfast, if that money will be counted as an investment?

Many thanks
Aaina

Post by **marcnath** » Tue Feb 25, 2020 6:40 pm

Aaina wrote: ↑
Tue Feb 25, 2020 4:09 pm
Hi,
Just wanted to know if we buy a Bed and breakfast, if that money will be counted as an investment?

Many thanks
Aaina

Not if the money is going to the previous owner

Aaina · Post by **Aaina** » Tue Feb 25, 2020 9:33 pm

Thanks marcnath,

I was under the impression that the value of a commercial property is classed as an investment if that premise will be used for business. Thanks

Aaina · Post by **Aaina** » Tue Feb 25, 2020 9:37 pm

The reason I ask is because of this paragraph under the extension section on page 26.
(i) If you have bought property as part of your business investment, the value of any residential
accommodation cannot be included. You must provide an estimate of the value of the residential
accommodation if it is part of the premises also used for your business. The valuation must be from
a surveyor who is a member of the Royal Institution of Chartered Surveyors dated within the three
months before the date of application

Aaina · Post by **Aaina** » Tue Feb 25, 2020 9:57 pm

And also came across this page where the lawyer says that It will be classed as an investment.

Third party weblink removed.

Very confused:(

Post by **marcnath** » Wed Feb 26, 2020 3:20 pm

Aaina wrote: ↑
Tue Feb 25, 2020 9:37 pm
The reason I ask is because of this paragraph under the extension section on page 26.
(i) If you have bought property as part of your business investment, the value of any residential
accommodation cannot be included. You must provide an estimate of the value of the residential
accommodation if it is part of the premises also used for your business. The valuation must be from
a surveyor who is a member of the Royal Institution of Chartered Surveyors dated within the three
months before the date of application

There are two separate aspects here.

1) If you buy the business from an existing owner, then the entire investment cannot be counted towards the investment.
2) If you just buy/rent a building and set up a totally new B&B, then the investment can be counted with an exception if you are also staying at the B&B. In that case, the value of proportion of the property you use for your residence has to be excluded.

Aaina · Post by **Aaina** » Wed Feb 26, 2020 6:45 pm

Thanks Marcnath,

The situation is we have already invested 150k with a partner, created two jobs and I need to invest the rest of 50k.

I was also thinking maybe I can open a business management consultancy via a limited company route as I have been in market research for a long time. I can invest money in that consultancy and help businesses/individuals by doing their research and plans . Do you think it will pass the genuine entrepreneur test.

Sorry, I know this is a tricky question but I just don't want to take any chance.

Post by **marcnath** » Wed Feb 26, 2020 8:45 pm

Aaina wrote: ↑
Wed Feb 26, 2020 6:45 pm
Thanks Marcnath,

The situation is we have already invested 150k with a partner, created two jobs and I need to invest the rest of 50k.

I was also thinking maybe I can open a business management consultancy via a limited company route as I have been in market research for a long time. I can invest money in that consultancy and help businesses/individuals by doing their research and plans . Do you think it will pass the genuine entrepreneur test.

Sorry, I know this is a tricky question but I just don't want to take any chance.

Can't see why not. Whether a business is genuine or not has nothing to do with the type of business.

Remember that if you are a Team, both people need to be involved equally in the businesses covering the entire 200K.

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