Investment in existing food take away business and job creation

Hi Moderators and everyone,

This is with regards to tier 1 ent.

Tier 1 visa Nov 2019 approved
4 companies formed in march 2020 , signed agreements to purchase in april 2020 and transferred in october 2020.
Funds Transferred from personal to Business accounts as a directors loan by september 2020 and paid to seller through our solicitor.

Purchased an existing food takeaway business for 800k with my shareholding of 65% with 2 other shareholders 35% ( one of them is non resident)

total 4 shops purchased and assets including machinery , fixture and fittings were 500k.
300k includes solicitors fees including landlords and ours, goodwill ,rental deposits, repair & maintenance , brand and suppliers deposits.
All of the shops were in running condition.

1) What out of these will be considered in my 200k investment as a tier 1 applicant? (i have already invested 520k in total )

2) Most of the employees are hired through a third party recruitment firm and in total 15 full time employees are on payroll , will it be counted as 15 employees or 65% of 15 employees or new jobs need to be created.

I have my BRP valid till Jan 2023. Planning to open more shops most probably will buy existing takeaways.I need guidance and help as i am planning for 3 years route.

Any help will be highly appreciated.
Thanks

Money spent buying or taking over a business will not count as per rules.
From 245D. Purpose of this route and meaning of business from Immigration Rules part 6A:

(ii) ‘Invested’ means that the funds have been invested into a business or businesses which the applicant is running as self-employed or as a director or member of a partnership. ‘Invested’ or ‘spent’ excludes spending on:

(1) the applicant’s own remuneration,
(2) buying any business from a previous owner, where the money ultimately goes to that previous owner (irrespective of whether it is received or held directly or indirectly by that previous owner) rather than into the business being purchased (This applies regardless of whether the money is channelled through the business en route to the previous owner, for example by means of the applicant or business purchasing ‘goodwill’ or other assets which were previously part of the business.),

https://www.gov.uk/guidance/immigration ... sed-system

If you have taken over a business you cannot claim jobs already in that business, you need at least 2 more positions in addition to all the previous roles. You need at least a net increase of two job positions.

sajid9608 wrote: ↑

Wed Mar 17, 2021 11:36 pm

Hi Moderators and everyone,

This is with regards to tier 1 ent.

Tier 1 visa Nov 2019 approved
4 companies formed in march 2020 , signed agreements to purchase in april 2020 and transferred in october 2020.
Funds Transferred from personal to Business accounts as a directors loan by september 2020 and paid to seller through our solicitor.

Purchased an existing food takeaway business for 800k with my shareholding of 65% with 2 other shareholders 35% ( one of them is non resident)

total 4 shops purchased and assets including machinery , fixture and fittings were 500k.
300k includes solicitors fees including landlords and ours, goodwill ,rental deposits, repair & maintenance , brand and suppliers deposits.
All of the shops were in running condition.

1) What out of these will be considered in my 200k investment as a tier 1 applicant? (i have already invested 520k in total )

2) Most of the employees are hired through a third party recruitment firm and in total 15 full time employees are on payroll , will it be counted as 15 employees or 65% of 15 employees or new jobs need to be created.

I have my BRP valid till Jan 2023. Planning to open more shops most probably will buy existing takeaways.I need guidance and help as i am planning for 3 years route.

Any help will be highly appreciated.
Thanks

1) very little. Your solicitor fees (not seller's), rental and supplier deposits, etc that have clearly not gone to seller or benefitted the seller could be argued as qualified for the investment rules.
2) From your description, it would be 0 if the employees are on the recruitment firms payroll rather than yours. Not sure what 65% is - it is 0 or 100%

Zimba wrote: ↑

Thu Mar 18, 2021 1:59 am

Money spent buying or taking over a business will not count as per rules.
From 245D. Purpose of this route and meaning of business from Immigration Rules part 6A:

(ii) ‘Invested’ means that the funds have been invested into a business or businesses which the applicant is running as self-employed or as a director or member of a partnership. ‘Invested’ or ‘spent’ excludes spending on:

(1) the applicant’s own remuneration,
(2) buying any business from a previous owner, where the money ultimately goes to that previous owner (irrespective of whether it is received or held directly or indirectly by that previous owner) rather than into the business being purchased (This applies regardless of whether the money is channelled through the business en route to the previous owner, for example by means of the applicant or business purchasing ‘goodwill’ or other assets which were previously part of the business.),

https://www.gov.uk/guidance/immigration ... sed-system

If you have taken over a business you cannot claim jobs already in that business, you need at least 2 more positions in addition to all the previous roles. You need at least a net increase of two job positions.

Thanks for a quick reply
1) SO most of the investment won't be counted.
2) I need to check with the previous owner about positions he already had as he was doing it through a recruitment company and none of the employee was on his payroll.

Only people on your company's payroll count

marcnath wrote: ↑

Thu Mar 18, 2021 7:35 am

sajid9608 wrote: ↑

Wed Mar 17, 2021 11:36 pm

Hi Moderators and everyone,

This is with regards to tier 1 ent.

Tier 1 visa Nov 2019 approved
4 companies formed in march 2020 , signed agreements to purchase in april 2020 and transferred in october 2020.
Funds Transferred from personal to Business accounts as a directors loan by september 2020 and paid to seller through our solicitor.

Purchased an existing food takeaway business for 800k with my shareholding of 65% with 2 other shareholders 35% ( one of them is non resident)

total 4 shops purchased and assets including machinery , fixture and fittings were 500k.
300k includes solicitors fees including landlords and ours, goodwill ,rental deposits, repair & maintenance , brand and suppliers deposits.
All of the shops were in running condition.

1) What out of these will be considered in my 200k investment as a tier 1 applicant? (i have already invested 520k in total )

2) Most of the employees are hired through a third party recruitment firm and in total 15 full time employees are on payroll , will it be counted as 15 employees or 65% of 15 employees or new jobs need to be created.

I have my BRP valid till Jan 2023. Planning to open more shops most probably will buy existing takeaways.I need guidance and help as i am planning for 3 years route.

Any help will be highly appreciated.
Thanks

1) very little. Your solicitor fees (not seller's), rental and supplier deposits, etc that have clearly not gone to seller or benefitted the seller could be argued as qualified for the investment rules.
2) From your description, it would be 0 if the employees are on the recruitment firms payroll rather than yours. Not sure what 65% is - it is 0 or 100%

Thanks Marcnath for your response

1) We made an asset purchase agreement as well but this went to seller so it will not be counted as an investment as per the information you had given.To clarify more:
a) 40k. We paid rent deposits allshops
b) 22k. Our solicitor 10k and landlords 12k ( as we had to invlolve 4 landlord solicitors)
c) 24k. Repairs and maintenance of machine and shops
d) 10k. New equipments.
e) 22k. Marketing after acquisition 22k
f) 12k. repairs done in shops 4 months post acquisition 12k
g) 45k. Working capital total all shops including stock and running shops and suppliers deposits
h) 10k. we had many other expenses like land registry , insurances , agreements
i) 20k rents paid to lanlords


Will these be counted as goodwill i know will not be a part investment?
We still pay for repairs of each shops and its machinery as needed , will it be from a business expense or investment?


2) Job creation
a)Yes they are not on our payroll and if we hire them directly on our payroll how will they be counted as new jobs or i have to create new positions?

b) i own 65% of shareholding in the business so do i have to create 10 new positions to apply for ILR after 3 years or out of those 10 new positions only 65% will be counted for my case ?

c) I Have to create 10 new positions or i can change the employee on existing positions ?

Thanks

Zimba wrote: ↑

Thu Mar 18, 2021 2:04 pm

Only people on your company's payroll count

Thanks
If i transfer all employees to my company payroll , will they be counted as new or still i have to create new Jobs apart from these ?

sajid9608 wrote: ↑

Thu Mar 18, 2021 2:40 pm

Thanks Marcnath for your response

1) We made an asset purchase agreement as well but this went to seller so it will not be counted as an investment as per the information you had given.To clarify more:
a) 40k. We paid rent deposits allshops
b) 22k. Our solicitor 10k and landlords 12k ( as we had to invlolve 4 landlord solicitors)
c) 24k. Repairs and maintenance of machine and shops
d) 10k. New equipments.
e) 22k. Marketing after acquisition 22k
f) 12k. repairs done in shops 4 months post acquisition 12k
g) 45k. Working capital total all shops including stock and running shops and suppliers deposits
h) 10k. we had many other expenses like land registry , insurances , agreements
i) 20k rents paid to lanlords


Will these be counted as goodwill i know will not be a part investment?
We still pay for repairs of each shops and its machinery as needed , will it be from a business expense or investment?


2) Job creation
a)Yes they are not on our payroll and if we hire them directly on our payroll how will they be counted as new jobs or i have to create new positions?

b) i own 65% of shareholding in the business so do i have to create 10 new positions to apply for ILR after 3 years or out of those 10 new positions only 65% will be counted for my case ?

c) I Have to create 10 new positions or i can change the employee on existing positions ?

Thanks

1) Assuming none of the highlighted amounts were not paid to seller, those are legitimate business expenses and should not be deducted from your investment.
2) a) In my personal opinion, it is a bit ambiguous. But if they were not on the company's payroll before your purchase and you take them on your payroll now, they should qualify as new jobs created under the rules.
b) Your share in the company has no relevance to the job creation. Even if you had 10%, you would still count the full job.
c) Immigration rules look for jobs, not employees. So changing an employee in a particular job does not make it new.

sajid9608 wrote: ↑

Thu Mar 18, 2021 2:44 pm

Zimba wrote: ↑

Thu Mar 18, 2021 2:04 pm

Only people on your company's payroll count

Thanks
If i transfer all employees to my company payroll , will they be counted as new or still i have to create new Jobs apart from these ?

If they worked for the business you purchased, they will be considered the existing employees and do not count. The rules require you to send the previous payroll as part of your documents. Have you read the guide ???

marcnath wrote: ↑

Thu Mar 18, 2021 3:41 pm

sajid9608 wrote: ↑

Thu Mar 18, 2021 2:40 pm

Thanks Marcnath for your response

1) We made an asset purchase agreement as well but this went to seller so it will not be counted as an investment as per the information you had given.To clarify more:
a) 40k. We paid rent deposits allshops
b) 22k. Our solicitor 10k and landlords 12k ( as we had to invlolve 4 landlord solicitors)
c) 24k. Repairs and maintenance of machine and shops
d) 10k. New equipments.
e) 22k. Marketing after acquisition 22k
f) 12k. repairs done in shops 4 months post acquisition 12k
g) 45k. Working capital total all shops including stock and running shops and suppliers deposits
h) 10k. we had many other expenses like land registry , insurances , agreements
i) 20k rents paid to lanlords


Will these be counted as goodwill i know will not be a part investment?
We still pay for repairs of each shops and its machinery as needed , will it be from a business expense or investment?


2) Job creation
a)Yes they are not on our payroll and if we hire them directly on our payroll how will they be counted as new jobs or i have to create new positions?

b) i own 65% of shareholding in the business so do i have to create 10 new positions to apply for ILR after 3 years or out of those 10 new positions only 65% will be counted for my case ?

c) I Have to create 10 new positions or i can change the employee on existing positions ?

Thanks

1) Assuming none of the highlighted amounts were not paid to seller, those are legitimate business expenses and should not be deducted from your investment.
2) a) In my personal opinion, it is a bit ambiguous. But if they were not on the company's payroll before your purchase and you take them on your payroll now, they should qualify as new jobs created under the rules.
b) Your share in the company has no relevance to the job creation. Even if you had 10%, you would still count the full job.
c) Immigration rules look for jobs, not employees. So changing an employee in a particular job does not make it new.

Dear Marcnath
Your help is highly appreciated

1). Yes, those amounts were not given to seller.

a)Business before our acquisition remained closed for 2 months due to going concern issues and lease transfer actually delayed the transfer process , rents paid were all in advance before acquisition as they were due in september and went directly to the landlords of each shop.Will it be added to investment or not?

B) As per the information , I am still short of legally required 200k investment for tier 1. How do i inject more ?
Any repairs or purchase of a new machinery from business itself will be counted towards investment or I have to inject more as director's loan ?

C) As in my earlier posts i told we are planning to start more shops , by when i have to invest that will be counted in my 200k investment for Tier 1?

2)
a) I am still confused how to do that! Yes i checked and they were on recruitment company's payroll.I know we have to bring those to our payroll but want to make sure that they will be counted.

b) I understood the job creation and how they will be counted that was asked in b & c.

c) Previous owner didn't show anyone on his payroll and not sure how to justify that new job roles are created.

Thanks

Dear All Moderators ( Specially Zimba and marcnath) and everyone contributing,

APPRECIATION POST!

All reponses are highly appreciated and getting such a quick response was something i never expected.
Its my first thread and really happy to get such a support through this platform specially from Seniors.
You guys are doing a really great job.

Thanks

Zimba wrote: ↑

Thu Mar 18, 2021 4:11 pm

sajid9608 wrote: ↑

Thu Mar 18, 2021 2:44 pm

Zimba wrote: ↑

Thu Mar 18, 2021 2:04 pm

Only people on your company's payroll count

Thanks
If i transfer all employees to my company payroll , will they be counted as new or still i have to create new Jobs apart from these ?

If they worked for the business you purchased, they will be considered the existing employees and do not count. The rules require you to send the previous payroll as part of your documents. Have you read the guide ???

Yes they worked when the business was purchased but business remained closed for 2 months.

We didn't purchase companies from him infact we formed new companies and purchased businesses on that and all those working before were on the payroll of a recruitment firm.

As per the current situation we also have employees through a recruitment firm and we pay that firm in total instead of paying directly to employees as it was done by previous owner.Now if i bring all of them on our payroll will it make a difference?

thanks

sajid9608 wrote: ↑

Thu Mar 18, 2021 4:34 pm

Dear Marcnath
Your help is highly appreciated

1). Yes, those amounts were not given to seller.

a)Business before our acquisition remained closed for 2 months due to going concern issues and lease transfer actually delayed the transfer process , rents paid were all in advance before acquisition as they were due in september and went directly to the landlords of each shop.Will it be added to investment or not?

B) As per the information , I am still short of legally required 200k investment for tier 1. How do i inject more ?
Any repairs or purchase of a new machinery from business itself will be counted towards investment or I have to inject more as director's loan ?

C) As in my earlier posts i told we are planning to start more shops , by when i have to invest that will be counted in my 200k investment for Tier 1?

2)
a) I am still confused how to do that! Yes i checked and they were on recruitment company's payroll.I know we have to bring those to our payroll but want to make sure that they will be counted.

b) I understood the job creation and how they will be counted that was asked in b & c.

c) Previous owner didn't show anyone on his payroll and not sure how to justify that new job roles are created.

Thanks

You need to understand the difference between investment and business expense.

1 A) and B)
Under Tier 1 rules, HO looks at investment amounts. These are amounts you transfer from you PERSONAL ACCOUNT to the BUSINESS ACCOUNT in your name - either as Director's loan or shareholding. What the business spends it in does not matter except for a few exceptions - your own remuneration and money paid to a previous business owner.

So, in your case, if you put in 65% of 800K, your investment is 520K minus any money that went to the previous owner of the business. What and how you spent the remaining money does not matter. (assuming you are not paying yourself).

On the same logic, it does not matter if the business spends a million pounds going forward. As long as the money is not something you have PUT INTO the business, it is not investment.

1 C) All investments have to made prior to your extension/accelerated ILR application.

2 There is no way to be sure that they will be counted. As I mentioned, the immigration rules don't specifically lay out this scenario. That means the case worker can interpret the rules. But it also means that if they refuse, you may have to go to court to get the interpretation agreed.

I have a difference of opinion with Zimba on this and I think you can justify them as new jobs created. But you should consult a professional immigration solicitor and follow their opinion/advice. Especially considering that the business was closed for two months before your acquisition (during which I assume that the business did not pay the recruitment company for the people), I think you have a case you can make that the jobs would have been lost anyway except for your investment.

Since you created new companies, you would anyway declare it as a new business. Even if HO then looks at the payroll of the old business 12 months before the acquisition, it will show no employees. So all your employees will satisfy the requirement of new jobs created. Again, I emphasise this is my personal opinion but you should take professional advice.