Director of own ltd company for few months. Documents?

[Greatlookinguy]

Hi All,
Quick question I have been an employee of various companies over the last six years with no break. Got my ILR last November. I went into IT contract work forming my own Limited Company (I am the director of the company and it's only employee) in March 2011.

As no returns have been submitted by my company to the HMRC yet (only paid VAT and NIC/PAYE payments every quarter - 2 payments over the last seven months), does anyone know what documentation should I be showing as part of my naturalisation application?

Also, for question 3.2 below.. should I select self-employed or director or empoyee..?? And for whichever option I select, what would be the corresponding proof..

3.2 Are you:
An employee?
A business partner?
Self-employed?
A director?

I can print out my self-assessment tax return for 2010-2011 which proves I am on the right side of HMRC till March/April this year... but what about from March till now. How do I prove to the Home Office that I am productively employed and not jobless..??

I have asked my accountant and he says, "As a director of a company you are not self-employed you are actually employed by the company and therefore you will need to provide different details for your naturalisation application. Therefore I would contact the Revenue to find out what conditions that you need to satisfy as a director of a limited company. "

Thank You in advance for any advice.

Cheers, K

[John]

The problem is that whilst your accountant's letter is correct from the tax point of view, the Immigration Rules, in para 6 which is just a long list of definitions, includes :-

"Self-Employed" means an applicant is registered as self-employed with HM Revenue & Customs, or is employed by a company of which the applicant is a controlling shareholder.

So UKBA see you as self-employed, even though HMRC see you as employed, or rather "the holder of an office or employment".

But I fear you are worrying too much about this matter. Look at the declaration you will sign on the form AN. You are authorising UKBA to contact HMRC, and no doubt UKBA in their nationality office in Liverpool have terminals connected into the HMRC computer system. So no need for you to forward supporting evidence.

Just a general point, many people are surprised just how little information is needed when making a Naturalisation application. Restrict yourself to supplying what they ask for!

[Greatlookinguy]

Thank You John. I seem to have overlooked that bit of definition on "self-employed"!

However, now that I am confirmed as being self-employed, doesn't the following bit from the Guidance form apply to me?

"3.1 – 3.5. If you do not pay income tax through PAYE you must demonstrate that you have discharged your obligations towards the H.M. Revenue & Customs, by attaching a Self Assessment Statement of Account (see page 16).

..and on Page-16:

SELF-EMPLOYED APPLICANTS
If you do not pay tax through Pay As You Earn (PAYE) arrangements, we require
• The most recent HM Revenue & Customs Self Assessment Statement of Account"

So a copy of last year's self-assessment form will be all that is needed?

********

I understand that the Nationality checking service can and will check with the HMRC records to see where I stand and the records will say that I have paid all my taxes in full.

My self-assessment form clearly states that I was NOT self employed last year. Thus my self-assessment form and my AN form are at odds with each other. I fear they might wonder whether my "self-employment" is upto acceptable standards these days..

*******

On a separate note, here is something I found on a consultant's website advising a person working in my circumstances, on how to proceed for their HSMP application. Now, I understand that the HSMP requires a greater scrutiny of one's financial affairs than the Naturalisation form. It's just that they have listed out clearly what is needed documentation wise:

* Payslips and dividend vouchers
* Bank statements
* Accountants letter

********

On a final note, you are very experienced in these matters (as a moderator with over 10, 000 posts am sure you are ) and if you're saying that a copy of my last year's self-assessment forms with a declaration that I am self employed now will do the trick, then that should be enough.

What say?

Thank You once more!

[John]

I understand that the Nationality checking service can and will check with the HMRC records to see where I stand

An NCS office would not do that, but the UKBA office in Liverpool will check.

Whilst UKBA classify you as self-employed, they will appreciate that HMRC see you as the "holder of an office or employment". Do you have a Self Assessment Statement of Account?

Has your 2010-2011 Self assessment been filed? Electronically? If so why don't you, or as relevant your Accountant/Tax Adviser, get a copy of the full tax computation prepared by the tax software used for the filing? If the HMRC's own software was used, certainly such a full computation is available.

if you're saying that a copy of my last year's self-assessment forms with a declaration that I am self employed now will do the trick, then that should be enough.

You are not self-employed for tax purposes.

What evidence have you got from the accountant? P60s? Dividends vouchers? Letter from the accountant?

[Greatlookinguy]

Thanks John

My accountant had filed my 2010-2011 tax returns online and I have a full electronic copy of the same. I rang up HMRC today and they confirmed they have received the return and I am up to date on all formalities as per their records. They also have me down as director of my company as per their records.

1) As I only left my permanent role in March 2011, the 2010-2011 Self-assessment tax return clearly lists the company I worked for during the course of the last financial year, therefore making me out to be an "employee".

2) The AN form will state that I am "self-employed" as that is the option I would have selected (based on the definition of a self-employed person in the immigration rules you have kindly provided in your first reply). I have been the director and sole shareholder of my own limited company since March 2011.

I figured that in case the person in the UKBA Liverpool office finds points 1 and 2 above contradictory, I might help ease any confusion by providing Payslips from my own company (given by my accountant), Dividend forms/vouchers, Company formation documents and Bank Statements if necessary, and so clarifying that although I was an employee in the last financial year, as of this March I am self-employed and doing pretty well for myself.

I cannot NOT submit the 2010-2011 self-assessment tax return as part of my naturalisation application because the latest one is required as per written rules in the Guidance forms, if I declare myself as self-employed. But submitting it might cause confusion (as it makes me out to be an employee and not self employed), to avoid which I submit company related documentation like payslips and dividend vouchers. I feel like I am chasing my own tail lol

At the same time, your warning of not giving too much information has been ringing loud in my ears..

So bottom line: Send in the 2010-2011 self-assessment return form only and sit tight, and if then asked by the UKBA, send in my own company documentation.. or give the latter right at the beginning, when I submit my application?

[John]

I have just checked the Guide AN. It includes :-

3.1 – 3.5. If you do not pay income tax through PAYE you must demonstrate that you have discharged your obligations towards the H.M. Revenue & Customs, by attaching a Self Assessment Statement of Account (see page 16)

Hint .... you do pay income tax through PAYE!

[Greatlookinguy]

Twist! You have a valid point John. However,

..aren't being self-employed and paying tax via PAYE contradictory? Doesn't paying tax via PAYE make one an employee...?? (after all my PAYE is paid by my company when it pays me a salary. Got the payslips to prove it.) Therefore, if I am an employee, and have a payslip from an "employer", how come I declare myself self-employed?

Yet by the very definition of the term in the immigration rules, I am self-employed.

My head is spinning now!!

Am I a self-employed person - who gets a monthly salary and payslip from a company (my employer?) - that pays my PAYE/NIC to the HMRC??!

Still wondering about what documentation should I submit with my application... just the payslips or nothing at all. Let the Liverpool folks figure it out. As I am self employed and I pay income tax through PAYE, there is no request for further documentation in the Guidance notes. Yippee Ka yayyyy!! ..or have I lost my mind by this time.

[John]

I fear you are looking for problems that do not exist. As I said before, many people are surprised just how little supporting evidence is required when submitting a Naturalisation application. So just supply what is actually said to be required, in the Guide AN.

[AccountantMatthew]

Not looking to hijack the thread here - just quickly answering your last point Greatlookinguy.

As John mentioned, it's just that the definition of self-employed is different for UKBA and HMRC - so you do get this paradox.

For HMRC purposes you are deemed to be employed as you are an officer of the company which is legally separate to you as an individual. Sole traders and partners in a partnership are deemed to be self employed as legally their businesses and themselves are one person.

For whatever reason, UKBA have deemed those who are in your position to be self employed. I can only assume that this is so that you can leave profits within the company if you want to and not be penalised points wise just because you don't want to take them out. Potentially UKBA may also see it to be practical as, from a high level at least, there are going to be many similarities in running the non-admin part of your business day to day whether you are a sole trader or a director of your own company. I'm sure there are many accountants and tax practitioners out there who will disagree (me included) but it's UKBA's game at the end of the day so they can set the rules.

It can confuse though.

[ramesheuk]

Hi,

I am also just like you (worked in different companies and started my own limited company after my ILR (in May 2011) and doing contracting)

In my AN application I mentioned as:

Occupation: Software Consultant
Are you : A Director (checked)
Name of the employer or business: my own limited company name
Address of the company : My company address
Address of the tax office: I mentioned my PAYE reference number and address, my previous employee paye reference and my UTR number

I successfully got my naturalisation certificate.

Hope this will help you.

[Greatlookinguy]

Thank You chaps (John, Matt and Ramesh). Appreciate your efforts in replying and getting into the discussion Am sure this thread will help others in the future.

Think I will have to take a call when I fill in the form in three weeks time.

Ramesh, who is/was in a similar situation to the one I am in, checked "Director" in his application, which, as John and I have discussed above, is not the correct choice (but he still succeeded in his application lol Just lends credence to John's advice of less-is-more)

I think I will check Self-employed as per the definition of Self-Employed in the immigration rules. Put in my personal UTR number, my company name and it's address (which is the same as my own home address).

No other supporting documents (for this section) because,

SELF-EMPLOYED APPLICANTS
If you do not pay tax through Pay As You Earn (PAYE) arrangements, we require
• The most recent HM Revenue & Customs Self Assessment Statement of Account"

..and I DO pay tax through PAYE.

Ideally, the Liverpool people will tap into the HMRC and NI computers, use my UTR number and see that I have paid all my dues and filed all my returns till date with the HMRC and NI.

In case they start acting funny and ask for other documentation or more information (they won't simply reject my application will they?), I've got the whole arsenal ready.. right from the 2010-2011 self-assessment tax return to payslips, dividend vouchers, bank statements and company formation documents. Hopefully it won't come to that.

Cheers all.