Extra income

Hello,
I am currently on Tier 2 General Visa having a full time job with my sponsor. I am a software developer. Last year, I made a web site and mobile applications for a friend's company and he paid me from his company's account via direct bank transfers.
Now since I have to file tax this year cause of this extra income which is above £10k, I thought of registering as a sole trader and declaring it. However, after I went through this forums, it seems I cannot register as a sole trader or a private limited company on a tier 2 visa. My question is, how do I declare this income to the HMRC?

Thanks

This is a no win situation. You have breached your Tier2 conditions by undertaking self employment. So you are now in a position where if you declare your additional earnings to HMRC you potentially bring yourself to the notice of UKVI.
At the other side of the equation if you don't declare the earnings you fall foul of HMRC which leads to the same outcome if the HO find out.

There is no simple solution that can legally solve both scenarios.

I disagree. You are allowed to work upto 20 hours per week in addition to your current job on Tier 2 provided it meets certain conditions which are: (taken directly from the guidelines on page 54, found here: https://www.gov.uk/government/uploads/s ... 4_2016.pdf )
Supplementary employment
221.You do not need to inform us of any supplementary employment, as long as it is:
 in either a job which is included on the Shortage Occupation List in Appendix K of the
Immigration Rules or a job in the same profession and at the same professional level as
the work for which your Certificate of Sponsorship was assigned; and
 no more than 20 hours per week; and
Tier 2 Policy Guidance (Version 04/2016) Page 55
 outside of the normal working hours for which your Certificate of Sponsorship was
assigned.
In addition, you must continue to work for your sponsor in the job recorded on your Certificate
of Sponsorship

So if the work you did satisfy the above clauses, then you are perfectly fine..

Looks possible.

245HC(d)(iii)(2) and 245HE(d)(iii)(2) permits supplementary employment, where

Under Part 6A of these Rules, "supplementary employment" means other employment in a job which appears on the Shortage Occupation List in Appendix K, or in the same profession and at the same professional level as that which the migrant is being sponsored to do provided that:

• (a) the migrant remains working for the Sponsor in the employment that the Certificate of Sponsorship Checking Service records that the migrant is being sponsored to do,
• (b) the other employment does not exceed 20 hours per week and takes place outside of the hours when the migrant is contracted to work for the Sponsor in the employment the migrant is being sponsored to do.

Updated:

“Supplementary employment” means employment in a job (other than the job for which the person is being sponsored) which appears on the Shortage Occupation Lists in Appendix Shortage Occupation Lists, or in the same profession and at the same professional level as the job for which the person is being sponsored, provided that:

• (a) the person remains working for the sponsor in the job for which the Certificate of Sponsorship records the person is being sponsored; and
• (b) the other employment does not exceed 20 hours per week and takes place outside of the hours when the person is contracted to work for the sponsor in the job for which the person is being sponsored.

Chase off down the routes you suggest if you wish.... It gets you no where.

Self employment is not covered... End of. Why is it self employment because he was not taxed at source. No PAYE... Hence he has the issue of declaring tax....

It's odd then that the definition of employment includes self-employment.

Interpretation wrote:Employment” unless the contrary intention appears, includes paid and unpaid employment, paid and unpaid work placements undertaken as part of a course or period of study, self employment and engaging in business or any professional activity.

There doesn't appear to be any contrary intention that supplementary employment excludes supplementary self employment in 245HC and 245HE nor are there any occurrences of the string "self employ" in applicant's Guidance nor Caseworker's instructions?

However, there is mention of self employment in the Sponsor a Tier 2 or 5 worker: guidance for employers.

38.49 wrote:If the migrant is self employed there must be a contract for employment/services between you and the migrant. This contract must show:
 the names and signatures of all involved (normally, you and the migrant)
 the start and end dates of the contract
 details of the job, or piece of work the migrant has been contracted to do
 an indication of how much the migrant will be paid

The self employment you state in the guidance is solely for the supply of a single defined contract. This allows the use of self employed individuals under tier 2 as an example to be brought in to undertake a supply and fit type role under a specific contract then return. Seen most often in the film and the theatre world where highly skilled individuals that can not come under CW rules are brought in to undertake one off projects.
AND the main point is that it is not supplementary or secondary working.

So if you want to state the case for supplementary or secondary working explain why he was not an employee in order to meet the requirements?

Frontier Mole wrote:AND the main point is that it is not supplementary or secondary working.

Given that the definition of employment includes "self employment", subject to contrary intention appearing, how can you infer that supplementary employment doesn't include supplementary self employment? Where does the contrary intention appear?

I'm struggling to find the contrary intention here.

Ok, so declaring the income and paying tax as a form of self-employment doesn't seem to be an option. So what can be done about this? I don't want to not declare it.

Seems to be semantics to me, the UKVI site uses the the term 'job' which is 'a paid position of regular employment' which seems to me to preclude self-employment which is irregular and not employment i the legal sense of the word.

However it's such a grey area I'd warrant the UKVI staff wouldn't know the difference unless it suddenly becomes an area to focus on - like the current T1G tax/self employment problems...

Tier2 general migrants are checked for UKVI by HMRC. There is a cross matching exercise performed regularly to identify under payment against declared COS salary and any income that is outside PAYE. This is then used to task Sponsors and/or migrants to be examined to establish the reasons behind the anomalies.

If the individual had been paid as a PAYE employee for the supplementary / secondary work he would have been in the safe zone. Hence the issue he faces now.