For Tier1, Need clarification for self employed evidence

Hi
I am currenty on HSMP and will apply for Tier 1 in Oct'08 as my visa expires on 23rd Nov'08. I need help to know the evidence i require for self employed.
Background:
I am a contractor and work under my company (100% ownership), which invoices the agency.
I do not give myself payslips and transfer money from my business account to my personal account as per need. This could be as low as 200 pounds and as high as 1700 pounds a week.
I have an accountant who does the audits for the company.
Issue:
The issues is that the required evidence (as per bia website) should show Net Profit of the company. The NET profit excludes the pay i give myself (as the director) which is less (£1000/month). Because of this exclusion, my Net profit comes down to 22k. I have P60 for the salary i take.
So,
Gross Net Profit (>40k)- (Expenses + Pay) = Net profit (around 22k).
I am very confused as what evidence should i show. If i term myself as self employed, the net profit is less (approx 22k) and if i term myself as salaried (pay is only 12k) and i do not have payslips. If i try to create payslips for myself (as I am the employer and employee), i will have loads of issues with dividends as i do not pay a standard/constant salary to show dividends.

Question : Can i show Company profit of around 22k + 12k as pay income (for which i have P60)?

If i have managed to confuse you, please ask for any detail that i am forgetting. This is very important.
Thank you

Sushil

pay back all small drawings TO COMPANY

and get transfer of 9k + 9k +9k as ( income =30 k )dividend from co a/c to personal a/c

do with bacs and sholud mention dividnd

Thank you Sushil!!
I have a small confusion. Where should i mention it as dividend? When i transfer money from business to my personal account, it shows my company name from where the money is coming. Should the name of the transfer show dividend? and later my accountant gives a letter mentioning the same?
Also, since i have 4 months more to apply, would it be feasible to transfer the next lot of money from my business a/c to personal a/c as dividends only.

Pardon me if my question sound silly.
cheers!!

Hi again!!
Can i show personal pay and company net profits as 2 sources of earnings even though they are from the same company?
Net Profit from the company does not count my pay. But my actual earning is profit of the company + pay i give myself.

sushil

Hi,
I am in also same situation. I pay myself £1000 per month salary and it is tax paid under PAYE, and £25000 net profit to my company so How should I prepare the earning?

£25000 Net Profit
£10000 my Salary
-----------
£35000 My earning

Can anybody help us?

Thanks in Advance
Raiees

Hi Raiees,
I got some solution from my CA for this scenario. However, i may not require all this as i'm among those who got the approval before 7th Nov ... but 'd like to let u know my findings.
There are a few things to check first.
If you are drawing all the profit to your personal account from your business account, then you cannot show as self employed. This is because you do not RETAIN your profits within the company and the source of your income is your pay (which is £1000) and the £ 25000, which you transfer to your personal account (on regular or irregular intervals) and can only be regarded as Dividends.

As it says under (Page 14 of the guidance note for Tier 1)
Self-Employed Earnings within a Business/Company
Structure:
If an applicant has worked in a self-employed capacity
through their own business/company structure and has
chosen to retain their earnings within the business/company,
they could provide: ....


The way i was told to show my pay was 1000*12 = £12000 + the dividends.
The challenge here could be if you transfer money on irregular intervals and different amounts.
Solution for this is ...
Get the amount of your PAYE pay of every month .... (which must be 1000 minus the tax). ....say £890.40.
For every month, see how much amount have you transfered to your personal account. Say if you transfered around £1400 on any date in 1 calendar month, then you need to calculate 1400-890.40=509.60 as dividend.
So basically you need a dividend voucher for 509.60 for that plus dividend vouchers for any other input to your personal account from you business account for the same calendar month.

I hope i have not confused you...
If you need any other assistance ... let me know.
cheers!!!

Sushil

sushilk wrote:Hi Raiees,
I got some solution from my CA for this scenario. However, i may not require all this as i'm among those who got the approval before 7th Nov ... but 'd like to let u know my findings.
There are a few things to check first.
If you are drawing all the profit to your personal account from your business account, then you cannot show as self employed. This is because you do not RETAIN your profits within the company and the source of your income is your pay (which is £1000) and the £ 25000, which you transfer to your personal account (on regular or irregular intervals) and can only be regarded as Dividends.

As it says under (Page 14 of the guidance note for Tier 1)
Self-Employed Earnings within a Business/Company
Structure:
If an applicant has worked in a self-employed capacity
through their own business/company structure and has
chosen to retain their earnings within the business/company,
they could provide: ....


The way i was told to show my pay was 1000*12 = £12000 + the dividends.
The challenge here could be if you transfer money on irregular intervals and different amounts.
Solution for this is ...
Get the amount of your PAYE pay of every month .... (which must be 1000 minus the tax). ....say £890.40.
For every month, see how much amount have you transfered to your personal account. Say if you transfered around £1400 on any date in 1 calendar month, then you need to calculate 1400-890.40=509.60 as dividend.
So basically you need a dividend voucher for 509.60 for that plus dividend vouchers for any other input to your personal account from you business account for the same calendar month.

I hope i have not confused you...
If you need any other assistance ... let me know.
cheers!!!

Sushil

Hi Suhsil,

What will the documents we need to produce if we come under FLR Old HSMP scheme, I mean if we are running our own Limited Company.

Kind Regards,
Prakash