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Tier1 investment into other company

Only for UK Tier 1 (Entrepreneur) points system

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kaps84
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Tier1 investment into other company

Post by kaps84 » Fri Jun 02, 2017 10:26 am

Hi All,

I have a quick question to ask.
I am on tier1 (200k) route having profitable business from day 1. After investing 200k into my business account. Can I make (correctly wording, my business can make) investment into 'other' company using my investment money?

where in the 'other' company (two situations arise):
1) I am not a director.
2) I am a director.

Question1:
Can I make (correctly wording, my business can make) investment into 'other' company using my investment money??

Question 2:
If the answer to question 1 is yes, does it really matter if I am a director in the other business or not?
-- Kaps84

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Zimba
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Re: Tier1 investment into other company

Post by Zimba » Fri Jun 02, 2017 1:56 pm

Can I make (correctly wording, my business can make) investment into 'other' company using my investment money??
Yes but such investment will not count for your visa
Question 2:
If the answer to question 1 is yes, does it really matter if I am a director in the other business or not?
No. Money must be invested under YOUR NAME in any other business which you are a director of.
Advice is given based on my personal research and experience only. Do NOT contact me via private message for immigration advice

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kaps84
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Re: Tier1 investment into other company

Post by kaps84 » Fri Jun 02, 2017 2:00 pm

Thanks Zimba88,

Do you mean money injected into the first business (my business) is not already counted as my investment to my business ?

If my company (since now the company owns the money) invests that money into another business, than why my investment to my business is not counted ?
-- Kaps84

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Zimba
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Re: Tier1 investment into other company

Post by Zimba » Fri Jun 02, 2017 2:08 pm

Because the money was not invested in your business but channelled through your business to another one
Advice is given based on my personal research and experience only. Do NOT contact me via private message for immigration advice

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kaps84
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Re: Tier1 investment into other company

Post by kaps84 » Fri Jun 02, 2017 3:03 pm

Zimba88, So I have two inferences from the above discussions :

1) I need to be a director in the other business.
> Instead of transferring the money from business to business, I better take out the money from first business and invest into the 2nd business as Director's loan.

2) If I don't go for the 2nd business, is it Ok to just keep the money idle in the first business. Since my business is already profitable. I will never actually be using 200k siting idle ?
-- Kaps84

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marcnath
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Re: Tier1 investment into other company

Post by marcnath » Fri Jun 02, 2017 3:09 pm

kaps84 wrote:Thanks Zimba88,

Do you mean money injected into the first business (my business) is not already counted as my investment to my business ?

If my company (since now the company owns the money) invests that money into another business, than why my investment to my business is not counted ?
The requirement is that your investment is for the purpose of the business itself.

In the guidance, you will see a statement - "The money should be used in the business, for example to encourage growth or expansion, or to improve services or products."

it will be difficult to explain use of the money to invest in another company against this criteria (is similar to buying shares in the stock market). You may be able to argue that if you have a very good explanation why that investment is driving the business of your first company. E.g. if your primary company joins a consortium to bid for a job that will use your original companies services.... Make sure you provide sufficient evidence and documentation in such cases.
My comments are in no way meant to be advisory. I have no professional knowledge of immigration. These are based on my own experience, convictions and personal interpretation of publicly available information.

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marcnath
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Re: Tier1 investment into other company

Post by marcnath » Fri Jun 02, 2017 3:14 pm

kaps84 wrote:Zimba88, So I have two inferences from the above discussions :

1) I need to be a director in the other business.
> Instead of transferring the money from business to business, I better take out the money from first business and invest into the 2nd business as Director's loan.

2) If I don't go for the 2nd business, is it Ok to just keep the money idle in the first business. Since my business is already profitable. I will never actually be using 200k siting idle ?
You mentioned your first business is profitable. If you can show that you have spent 200K in the first business for the purpose of that business operations - salaries, marketing, office, etc. and you still have 200K left over, you should be able to use that money in any manner (including investing in another company of which you are not a director).

The condition for the extension is that 200K should have been "spent" for the purposes of growing that business.

Again, make sure your cover letter explains all this upfront or your risk, at the minimum, it being classified as a complex case.
My comments are in no way meant to be advisory. I have no professional knowledge of immigration. These are based on my own experience, convictions and personal interpretation of publicly available information.

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kaps84
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Re: Tier1 investment into other company

Post by kaps84 » Fri Jun 02, 2017 3:39 pm

marcnath wrote:
kaps84 wrote:Zimba88, So I have two inferences from the above discussions :

1) I need to be a director in the other business.
> Instead of transferring the money from business to business, I better take out the money from first business and invest into the 2nd business as Director's loan.

2) If I don't go for the 2nd business, is it Ok to just keep the money idle in the first business. Since my business is already profitable. I will never actually be using 200k siting idle ?
You mentioned your first business is profitable. If you can show that you have spent 200K in the first business for the purpose of that business operations - salaries, marketing, office, etc. and you still have 200K left over, you should be able to use that money in any manner (including investing in another company of which you are not a director).

The condition for the extension is that 200K should have been "spent" for the purposes of growing that business.

Again, make sure your cover letter explains all this upfront or your risk, at the minimum, it being classified as a complex case.

Thanks Marcnath,

Do you mean, if the money is sitting idle (200k) in my first business account is not counted as investment?

My profitable business has minimum expenses (other than salaries) and note that since I am investing in my 3rd year of TIE and the salaries are all paid in 1st and 2nd year and in 3rd year (before I added my 200k to business account) - basically my investment has not paid any salaries.
-- Kaps84

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marcnath
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Re: Tier1 investment into other company

Post by marcnath » Sat Jun 03, 2017 6:55 am

kaps84 wrote:
marcnath wrote: You mentioned your first business is profitable. If you can show that you have spent 200K in the first business for the purpose of that business operations - salaries, marketing, office, etc. and you still have 200K left over, you should be able to use that money in any manner (including investing in another company of which you are not a director).

The condition for the extension is that 200K should have been "spent" for the purposes of growing that business.

Again, make sure your cover letter explains all this upfront or your risk, at the minimum, it being classified as a complex case.

Thanks Marcnath,

Do you mean, if the money is sitting idle (200k) in my first business account is not counted as investment?

My profitable business has minimum expenses (other than salaries) and note that since I am investing in my 3rd year of TIE and the salaries are all paid in 1st and 2nd year and in 3rd year (before I added my 200k to business account) - basically my investment has not paid any salaries.
In Section A21 of the guideline, it states the following:
Money deposited in a bank account, even if it is in a United Kingdom business bank account, is not counted as investment in business. The money should be used in the business, for example to encourage growth or expansion, or to improve services or products.
While, on the surface, it means your investment does not qualify, I wouldn't worry about it:
1. The intent behind this is guard against people who have access to money and just use that to get the points.
2. While the CWs sometimes seem too bureaucratic, on the whole they are reasonable.
3. I don't see that phrase in the actual law and as long as you meet the requirements as stated in the law, you have a good argument.
But under the circumstances, I would not take the money out for anything other than genuine business needs so you can always argue it is for future business growth.
My comments are in no way meant to be advisory. I have no professional knowledge of immigration. These are based on my own experience, convictions and personal interpretation of publicly available information.

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