Change of business- impact on ILR/second extension

I am posting this question on behalf of my brother and it doesn't relate to my business- I am therefore making a separate thread rather than continuing on my own thread.

His own business got off to a good start but the past year has been very tough due to loss of clients. His personal issues further hampered his prospects and now he is mulling over starting a new business (he has been working on the business plan for a few months).
The problem is that he is due to apply for ILR soon. He could have applied earlier but didn't go for it due to numerous reasons that relate to his personal life rather than the business.

Would it be a major red flag to have a start up business/original business closing down just before applying for ILR? I am inclined to believe it would be, but I thought I'd ask here as to whether anyone did this before extension/ILR and still succeeded?

Thank you.

No it will not affect him if all reasons for switching & closure(s) are genuine

I would advice start a new business under the same limited company

teddybear79 wrote: ↑

Wed Mar 07, 2018 6:51 pm

I would advice start a new business under the same limited company

Thank you for your message. Wouldn't that cause concerns, too, if suddenly a new business type is added to the business category on the Companies House profile? Or if there's an interview and he's questioned about it?

Yes but its better option than closing the business and starting a new one.

sm12 wrote: ↑

Wed Mar 07, 2018 5:35 pm

I am posting this question on behalf of my brother and it doesn't relate to my business- I am therefore making a separate thread rather than continuing on my own thread.

His own business got off to a good start but the past year has been very tough due to loss of clients. His personal issues further hampered his prospects and now he is mulling over starting a new business (he has been working on the business plan for a few months).
The problem is that he is due to apply for ILR soon. He could have applied earlier but didn't go for it due to numerous reasons that relate to his personal life rather than the business.

Would it be a major red flag to have a start up business/original business closing down just before applying for ILR? I am inclined to believe it would be, but I thought I'd ask here as to whether anyone did this before extension/ILR and still succeeded?

Thank you.

T1E is a points based system. And changing the business is definitely not a reason to deny any points.

The previous guidance used to have a section that said
We recognise that, as an entrepreneur, you may have moved on to other activities and no longer be involved in the business in which you initially invested, but we still require this evidence to show that the money was invested.

Clearly, HO is aware that things change for entrepreneurs.

As long as you can explain the reason for the change (needed only in the case of an interview), there should be no issues at all.

Hi Marcnath

Thank you for your reply.
If he begins a new business just before his application, it'll of course take time for it to take off, start generating revenue, etc. Can this go against him in the genuine entrepreneur test?

sm12 wrote: ↑

Fri Mar 23, 2018 6:45 pm

Hi Marcnath

Thank you for your reply.
If he begins a new business just before his application, it'll of course take time for it to take off, start generating revenue, etc. Can this go against him in the genuine entrepreneur test?

All of the genuineness based refusals seen here have been the result of interviews where the answers have been inconsistent or misunderstood.
None has been because CW has evaluated the business.

marcnath wrote: ↑

Fri Mar 23, 2018 7:19 pm

sm12 wrote: ↑

Fri Mar 23, 2018 6:45 pm

Hi Marcnath

Thank you for your reply.
If he begins a new business just before his application, it'll of course take time for it to take off, start generating revenue, etc. Can this go against him in the genuine entrepreneur test?

All of the genuineness based refusals seen here have been the result of interviews where the answers have been inconsistent or misunderstood.
None has been because CW has evaluated the business.

Thank you.
This is his primary concern- that he cannot show a successful business as he won't have enough time to do the same.

My brother has decided to go ahead with starting his new venture.

He will be claiming points for creating jobs on the basis of the work that he did when running his old business.

In addition to providing the Current Appointments Report for the new business, what other documents does he need to send for the new business? Bank statements and tax registration proof?

sm12 wrote: ↑

Thu Mar 29, 2018 6:25 pm

My brother has decided to go ahead with starting his new venture.

He will be claiming points for creating jobs on the basis of the work that he did when running his old business.

In addition to providing the Current Appointments Report for the new business, what other documents does he need to send for the new business? Bank statements and tax registration proof?

If he is not claiming any points from the new business - there are no documents to send regarding the new business. Not even the CAR.

If he wants to use the new business to show he was still a Director in the 3 months before extension, then the CAR and a Bank account statement would be needed plus a tax document.

marcnath wrote: ↑

Thu Mar 29, 2018 8:01 pm

sm12 wrote: ↑

Thu Mar 29, 2018 6:25 pm

My brother has decided to go ahead with starting his new venture.

He will be claiming points for creating jobs on the basis of the work that he did when running his old business.

In addition to providing the Current Appointments Report for the new business, what other documents does he need to send for the new business? Bank statements and tax registration proof?

If he is not claiming any points from the new business - there are no documents to send regarding the new business. Not even the CAR.

If he wants to use the new business to show he was still a Director in the 3 months before extension, then the CAR and a Bank account statement would be needed plus a tax document.

Thank you.
Yes, he is planning to quit as a director of the current business, so he'll use the new business to show that he's still engaged in a business.

marcnath wrote: ↑

Wed Mar 07, 2018 9:04 pm

sm12 wrote: ↑

Wed Mar 07, 2018 5:35 pm

I am posting this question on behalf of my brother and it doesn't relate to my business- I am therefore making a separate thread rather than continuing on my own thread.

His own business got off to a good start but the past year has been very tough due to loss of clients. His personal issues further hampered his prospects and now he is mulling over starting a new business (he has been working on the business plan for a few months).
The problem is that he is due to apply for ILR soon. He could have applied earlier but didn't go for it due to numerous reasons that relate to his personal life rather than the business.

Would it be a major red flag to have a start up business/original business closing down just before applying for ILR? I am inclined to believe it would be, but I thought I'd ask here as to whether anyone did this before extension/ILR and still succeeded?

Thank you.

T1E is a points based system. And changing the business is definitely not a reason to deny any points.

The previous guidance used to have a section that said
We recognise that, as an entrepreneur, you may have moved on to other activities and no longer be involved in the business in which you initially invested, but we still require this evidence to show that the money was invested.

Clearly, HO is aware that things change for entrepreneurs.

As long as you can explain the reason for the change (needed only in the case of an interview), there should be no issues at all.

Hello Marcnath

Has the above paragraph been removed from the caseworkers' guidance as well?
Can't seem to find it.

sm12 wrote: ↑

Thu Apr 12, 2018 7:04 am

marcnath wrote: ↑

Wed Mar 07, 2018 9:04 pm

sm12 wrote: ↑

Wed Mar 07, 2018 5:35 pm

I am posting this question on behalf of my brother and it doesn't relate to my business- I am therefore making a separate thread rather than continuing on my own thread.

His own business got off to a good start but the past year has been very tough due to loss of clients. His personal issues further hampered his prospects and now he is mulling over starting a new business (he has been working on the business plan for a few months).
The problem is that he is due to apply for ILR soon. He could have applied earlier but didn't go for it due to numerous reasons that relate to his personal life rather than the business.

Would it be a major red flag to have a start up business/original business closing down just before applying for ILR? I am inclined to believe it would be, but I thought I'd ask here as to whether anyone did this before extension/ILR and still succeeded?

Thank you.

T1E is a points based system. And changing the business is definitely not a reason to deny any points.

The previous guidance used to have a section that said
We recognise that, as an entrepreneur, you may have moved on to other activities and no longer be involved in the business in which you initially invested, but we still require this evidence to show that the money was invested.

Clearly, HO is aware that things change for entrepreneurs.

As long as you can explain the reason for the change (needed only in the case of an interview), there should be no issues at all.

Hello Marcnath

Has the above paragraph been removed from the caseworkers' guidance as well?
Can't seem to find it.

I haven't checked the CW guidance for this in either the old or new versions, so I am not sure.

My brother is applying for another extension rather than ILR.

He is claiming points for his first business. In the form where employees' details have to be entered, does he need to put the start date as the start date from which points are being claimed, or the original start date with the company?

sm12 wrote: ↑

Tue May 15, 2018 3:43 am

My brother is applying for another extension rather than ILR.

He is claiming points for his first business. In the form where employees' details have to be entered, does he need to put the start date as the start date from which points are being claimed, or the original start date with the company?

The start date is the start date - not sure what the doubt is. If they intended it to be claim start date, I am sure they would have said so

marcnath wrote: ↑

Tue May 15, 2018 5:57 am

sm12 wrote: ↑

Tue May 15, 2018 3:43 am

My brother is applying for another extension rather than ILR.

He is claiming points for his first business. In the form where employees' details have to be entered, does he need to put the start date as the start date from which points are being claimed, or the original start date with the company?

The start date is the start date - not sure what the doubt is. If they intended it to be claim start date, I am sure they would have said so

Yes, that's what I told him as I filled it in that way.
But he was still uncertain as it doesn't make it clear from which date he's claiming points, so I thought it might be worthwhile asking here.
Thank you.

marcnath wrote: ↑

Thu Mar 29, 2018 8:01 pm

If he is not claiming any points from the new business - there are no documents to send regarding the new business. Not even the CAR.

If he wants to use the new business to show he was still a Director in the 3 months before extension, then the CAR and a Bank account statement would be needed plus a tax document.

Hi Marcnath

He is sending documents for both businesses.
Also, he has been using his investment to cover business expenses, and used the revenue generated to pay himself a salary. However, his business was in loss. Even though the revenue was adequate to cover the salary, while the investment covered all other expenses, does he need to justify taking a salary in the application considering the loss?
E.g.
Investment made and shown in previous application: £50,000
Revenue generated: £30,000
Business expenses: £40,000 (all covered by investment £50,000)
Salary paid: £15,000 (all covered by revenue £30,000)
Loss: £25,000
Although these aren't the exact numbers from his accounts, as I have tried to simplify them for the purpose of explaining the situation, but the situation is like the example, where there is a loss but the revenue actually covers the salary and the investment covers the other expenses.

sm12 wrote: ↑

Fri Jun 15, 2018 4:39 pm

Hi Marcnath

He is sending documents for both businesses.
Also, he has been using his investment to cover business expenses, and used the revenue generated to pay himself a salary. However, his business was in loss. Even though the revenue was adequate to cover the salary, while the investment covered all other expenses, does he need to justify taking a salary in the application considering the loss?
E.g.
Investment made and shown in previous application: £50,000
Revenue generated: £30,000
Business expenses: £40,000 (all covered by investment £50,000)
Salary paid: £15,000 (all covered by revenue £30,000)
Loss: £25,000
Although these aren't the exact numbers from his accounts, as I have tried to simplify them for the purpose of explaining the situation, but the situation is like the example, where there is a loss but the revenue actually covers the salary and the investment covers the other expenses.

Please refrain from tagging on to old posts. If you think this has an impact on your own application, then please raise the question in your own post.

Thanks

My brother is applying for a second extension and I am posting a separate thread in continuation of a previous one, because it is not related to my application (he is not a business partner of mine and I applied for ILR not a second extension).

He has two businesses, one which is very new.

He is sending documents for both businesses.

In his first business, he has been using his investment to cover business expenses, and used the revenue generated to pay himself a salary. However, his business was in loss. Even though the revenue was adequate to cover the salary, while the investment covered all other expenses, does he need to justify taking a salary in the application considering the loss?
E.g.
Investment made and shown in previous application: £50,000
Revenue generated: £30,000
Business expenses: £40,000 (all covered by investment £50,000)
Salary paid: £15,000 (all covered by revenue £30,000)
Loss: £25,000
Although these aren't the exact numbers from his accounts, as I have tried to simplify them for the purpose of explaining the situation, but the situation is like the example, where there is a loss but the revenue actually covers the salary and the investment covers the other expenses.
Does he need to explain this in his application?

If he is applying for a second extension, he should have already submitted the investment evidence and have points awarded for investment in the 1st extension.

So why would he refer to investments at all ?

Am I missing something ?

marcnath wrote: ↑

Fri Jun 15, 2018 6:34 pm

If he is applying for a second extension, he should have already submitted the investment evidence and have points awarded for investment in the 1st extension.

So why would he refer to investments at all ?

Am I missing something ?

Thank you for your reply.
Yes, he was awarded points for his £50K investment.
However, the requirement of not using the investment for his own remuneration still applies I think? So would it be advisable to write an explanation of the above in the cover letter?

sm12 wrote: ↑

Fri Jun 15, 2018 6:38 pm

marcnath wrote: ↑

Fri Jun 15, 2018 6:34 pm

If he is applying for a second extension, he should have already submitted the investment evidence and have points awarded for investment in the 1st extension.

So why would he refer to investments at all ?

Am I missing something ?

Thank you for your reply.
Yes, he was awarded points for his £50K investment.
However, the requirement of not using the investment for his own remuneration still applies I think? So would it be advisable to write an explanation of the above in the cover letter?

I have not seen anything that substantiates the highlighted part