ILR rejected due to tax issue

[benneviss]

I have a friend who went to PEO for the ILR and it has been rejected on the basis of deception.

There was a discrepancy in the amount he declared to HMRC and HO while obtaining his Tier-1 extension.

He has now instructed a solicitor who advised him to rectify his mistakes and clear his accounts with HMRC before the appeal hearing .

I just want to know ; is anybody know any one who got a success after clearing his due with HMRC?

His solicitor says that there would not be a problem as they are clearing all the objection raised by HO.

[great.britain]

Hi mate.

Sorry to hear that. Could you post more info about the case?
1. Did he show his self-employment or employment earnings or both at ILR time.

2. How much was the difference in amounts he showed to HMRC and HO... Was it a massive difference? Please give the figures if possible.

3. Did he pay less tax or no tax at all?

What made HO feel suspicious about the case and then they carried out Tier 1 extension checks?

Though HO has the right by law to check all details. However, they don't normally carry out checks unless they have a suspicion.

Looking forward to the reply.

Regards

Ali

[sankadel]

HI,
please put the entire application details from start to finish including the first port of entry in to the united kingdom, forms used to apply for ILR and every details. I am sure that will help forum members to understand your friends case and would be able to suggest more on that case.

[benneviss]

He came to this country in 2009 on tier-1(general ) , applied for an extension on the basis on employment + self employment basis in 2012 .

After approval of his extension application , he declare 40 % lesser amount to HMRC than he showed to HO and adjusted his profit with expenses . So , his tax liability was reduced to very low amount which he paid.

He went for ILR (Set O) with employment and self employment incomes and caught out. There was no unusual entry in his account statement which would have raised any suspicion to a caseworker. However , I believe that caseworker do check now as a matter of procedure. If they have any doubts then they invite you for an interview.

A solicitor advised him to rectify HO's objection , in short rectify his tax return and pay tax accordingly before the appeal hearing.

I am hoping to meet him during this weekend to get his rejection letter. I will put details of a letter when I have it.

[vin123]

UKBA considers limited company director-employed+shareholders as self employment.

So any applicant who goes for an Extension or ILR MUST take the following, otherwise they stand a good chance for rejection.

For company

a) limited company account statements for financial years showing net profit (from a certified accountant)
b) company bank statements (for the financial years) showing inbound and outbound cash flow

for you

c) Personal bank statements (showing payment salary/divend payment from company accounts and the dates)
d) HMRC FY self-assessment statement (to match both account and salary/divident payment received)

If you do not take - you will get rejected. Simple. Period.

[fn286]

Hi Beneviss,

It is really unfortunate your friend was rejected. You mentioned he applied as employed and self employed, you will have to check with he applied as a limited company director or sole trader? I have a feeling he applied under self employment (sole trader) category.

Limited company director is considered employed. The biggest proof can be found in Home office guidance (previous earnings) where it is mentioned that GROSS dividends will be considered if a person is managing a limited company and drawing income from it. This is very similar to a regular salaried employment where you can claim point against gross salary. If not than net dividends would've been considered. Limited company is a corporate body, and cannot be governed as self employed. To give example. Companies pay millions in bonus/dividends to their employees and then go bust. Another scenario would be if a limited company director hires an employee and pays him a salary. How this company would be different for that employee, will he be considered self employed? When both are drawing income from same company how can one will be considered self employed and other as employed. If you work for a good limited company then you know that employee are promoted to director (with profit share) level so does that make them self employed all of sudden? Anyone whose working professional and educated would know. AND still you don't believe me than request the hmrc employer details for a limited company director ...that employment history letter will have 'Limited company employee' written on it, not limited company self employed.

Any how, My understanding is even if you took huge dividends and incurred expenses or losses later in the year doesn't make any difference for HO. Net profits are considered for self employment only where no limited company is formed. I'm aware that all limited company directors and self employed traders undergo scrutiny during applications.

Please do share when you find out more about his situation, employment status and what really triggered the rejection? What I'm trying find out a case where a limited company director is rejected for same reason (claimed higher income earlier but later incurred expenses and paid taxes on reduced income).

[benneviss]

Thanks Vin123 and fn286 for your replies.

He was self employed as a sole trader and went along with all correct documents suggested in guidance .

It appears that caseworker while checking out his tax history with HMRC spotted discrepancy and rejected his application .

I just want to know that is anyone out there who was rejected on similar way and won his/her appeal after clearing with HMRC .

Or any logic you might have , what are the chances to win before the tribunal? I am sure there are more cases out there and will come out more in few months time.

[fn286]

HI Benneviss,

Why am I not surprised? I knew your friend applied as a sole trader, the easiest one to be picked by Home office and face rejection. Sometimes if you're lucky you escape the rejection but 90% of the time you get rejected. And I do have a feeling that your friend never paid Class 2 National Insurance? This really helps sole traders to avoid rejection.

It is a fact that majority of the traders try to pay less tax in real life but unfortunately this doesn't work for visa purpose, like I said your net earnings are considered for scoring. The best option, or less painful I must say, is being a salaried employee. Any good accountant would suggest that. The second best option is the Limited company director. But in any case you have to be careful with HMRC matters.

Unfortunately people who deserve to be in UK are facing these challenges due to EU crap. Home office cannot kick you out but all they can do is delaying your case and basically make more money out of you. People who can't even speak english are more valuable then non -EU migrants.

Your friend will get ILR for sure, but he will have to bear the stress. Ask him to re-submit accounts to HMRC as a correction (reduced expenses/losses). Once records are updated with HMRC, they will come for tax. so he will have to waste more money. and then HMRC records are updated he will have to re-apply for ILR with HMRC confirmation letter. He can pay tax in installments. This whole process wil take a month and then he can apply again.

Sometimes just a confirmation letter from HMRC works even if you dont pay taxes, as you do get sometime from HMRC. If your friends is struggling with cash then he can pay tax later. But I wouldn't recommend that.

Thanks.

[vin123]

It is not mule difficult as fn286 thinks. "self-employed" is a category that UKBA puts extension application.

Self-employed normally operates in 2 modes

a) via limited company (shareholders to take dividend income) OR
b) by registering themselves as self-employed and paying Class 2 NIC

Once again - its all down to how you "operated" and the proving the same by the relevant set of documents you take to UKBA office!

Simple rule

Company earns money - company pays tax (account statements filed at company house showing net profit)
You earn money (dividend + salary) - you pay tax ( self assessment )

Company belongs to you - show the same proof ! (contract documents)

You operated as self employed - you take a detailed account of income you generated for yourself (self-assessment copies) and the net tax you paid at the end of the financial year.


Rule of thumb : whether self-employed or limited company director : employ a good qualified accountant and make sure your company accounts(those who operate using limited company) OR trading income and accounts (in case of those self-employed) are properly book-keeped alongside your self-assessment!!. Self assessment is a MUST, otherwise you stand a big chance of rejection and there is no escape from it!!

Expenses

All business operations incur expenses. So HMRC allows an expense limit that you can claim on expenditures as long as it is genuinely attributable to the total revenue it generated.

For e.g if a contractor worked away from home at a rate of £250 per day and claiming a hotel expenditure at £125 per night is not attributable, however a £50 claim may be attributable. UKBA will scrutinised at that level ONLY if there is massive difference between income and net profit in the case of limited company or in the case of self-employment, expenses claimed in self-assessment and the net tax paid.

[pinkpop]

Hi Beneviss,

It is really unfortunate your friend was rejected. You mentioned he applied as employed and self employed, you will have to check with he applied as a limited company director or sole trader? I have a feeling he applied under self employment (sole trader) category.

Limited company director is considered employed. The biggest proof can be found in Home office guidance (previous earnings) where it is mentioned that GROSS dividends will be considered if a person is managing a limited company and drawing income from it. This is very similar to a regular salaried employment where you can claim point against gross salary. If not than net dividends would've been considered. Limited company is a corporate body, and cannot be governed as self employed. To give example. Companies pay millions in bonus/dividends to their employees and then go bust. Another scenario would be if a limited company director hires an employee and pays him a salary. How this company would be different for that employee, will he be considered self employed? When both are drawing income from same company how can one will be considered self employed and other as employed. If you work for a good limited company then you know that employee are promoted to director (with profit share) level so does that make them self employed all of sudden? Anyone whose working professional and educated would know. AND still you don't believe me than request the hmrc employer details for a limited company director ...that employment history letter will have 'Limited company employee' written on it, not limited company self employed.

Any how, My understanding is even if you took huge dividends and incurred expenses or losses later in the year doesn't make any difference for HO. Net profits are considered for self employment only where no limited company is formed. I'm aware that all limited company directors and self employed traders undergo scrutiny during applications.

Please do share when you find out more about his situation, employment status and what really triggered the rejection? What I'm trying find out a case where a limited company director is rejected for same reason (claimed higher income earlier but later incurred expenses and paid taxes on reduced income).

Please explain if a director of company is employee but why ho need documents such as accountant letter business accounts business bank statement etc.

If you think a director is employee so that means you only need to submit 12 personal bank statements and payslips not any documents related to the company? Whatit will happen if you do that and is it possible ho find out the ownership of the company?

I presume that a director of company is employee under hmrc not under ho.

[vin123]

pinkpop,

There is a lot of 'self-employment' misunderstanding spread in this forum as I see it.

It is very simple and a universal rule in any country except monopolies - you work, you generate a revenue or income and you pay tax to the government.

Whether you worked as a limited company director with shareholdings or as a registered self-employed/sole-trader - all it matters to UKBA is to see evidence of the same. If you worked as a limited company director, the only way you can show you paid tax is by taking the company account statements (because dividends are not double taxed, so self assessment may show ZERO tax).
If you do not take evidence, you will be rejected. Simple. Period.

Hence it is very important for people to get an accountant in place at least 3-4 months before they go for tier 1 extn or ILR application.
So he or she will understand each individual situation and prepare their documents.

[pinkpop]

pinkpop,

There is a lot of 'self-employment' misunderstanding spread in this forum as I see it.

It is very simple and a universal rule in any country except monopolies - you work, you generate a revenue or income and you pay tax to the government.

Whether you worked as a limited company director with shareholdings or as a registered self-employed/sole-trader - all it matters to UKBA is to see evidence of the same. If you worked as a limited company director, the only way you can show you paid tax is by taking the company account statements (because dividends are not double taxed, so self assessment may show ZERO tax).
If you do not take evidence, you will be rejected. Simple. Period.

Hence it is very important for people to get an accountant in place at least 3-4 months before they go for tier 1 extn or ILR application.
So he or she will understand each individual situation and prepare their documents.

So if a director of comapny with shareholding only take income monthly though out whole 5 years and never take dividents what this stiuation will be like?

[sheraz_aries]

For Tier 1 General 5 year employed route, do HO still check tax records with HMRC? was wondering as if your work in a company then you already get tax deducted by employer before you get salary each month in your account

[vin123]

So if a director of comapny with shareholding only take income monthly though out whole 5 years and never take dividents what this stiuation will be like?

That's perfectly a possible case.
For montlhy income, there will be payslips, and for payslips there will be a P60 issued at the end of year. So if a director of the company took only salary, he or she will need P60 to prove how much tax they've paid on salary.

If the salary taken is minimal (for e.g £12K per annum without any dividends - which does not really meet the extension criteria), then they need company accounts statement to show company revenue and net profit. This along with ownership is sufficient to prove the income generated will qualify for ILR or tier 1 extension.

[vin123]

For Tier 1 General 5 year employed route, do HO still check tax records with HMRC? was wondering as if your work in a company then you already get tax deducted by employer before you get salary each month in your account

HO will not and cannot check with HMRC or companies house records. Under normal cases, they are not allowed to access your information without your permission. There are clear cases where HMRC and UKBA are permitted to share information but they mainly are from a law enforcement perspective.

UKBA does not have permission to access an applicant records held in other computer systems. If anyone in these forums claims UKBA computer systems and HMRC computer systems are linked for personal records - then they are lying. All government departments adhere to strict data protection and privacy rules.

That is the reason why a candidate is expected to take the right set of original documents for extension application or ILR. They qualify only on individual merit. Simple.

IF you work in a company, yes you get a tax deducted salary every month. At the end of tax year, you will also get a statement that shows the tax paid for the financial year. Its called P60. So that statement is an important document that proves how much tax you paid. UKBA cannot access that information from HMRC records, hence you have to take the original proof with you on the day.

[pinkpop]

So if a director of comapny with shareholding only take income monthly though out whole 5 years and never take dividents what this stiuation will be like?

That's perfectly a possible case.
For montlhy income, there will be payslips, and for payslips there will be a P60 issued at the end of year. So if a director of the company took only salary, he or she will need P60 to prove how much tax they've paid on salary.

If the salary taken is minimal (for e.g £12K per annum without any dividends - which does not really meet the extension criteria), then they need company accounts statement to show company revenue and net profit. This along with ownership is sufficient to prove the income generated will qualify for ILR or tier 1 extension.

My friend has 6 years p60s and all yearly income are met ho requirement except one year for maternity leave. Does she need submit any business account etc.. in her initial t1g and extension she only submitted payslips ans p60s and she is not a director of company any more as the company has been sold to a british in 2012 but she still work in that company.

[vin123]

My friend has 6 years p60s and all yearly income are met ho requirement except one year for maternity leave. Does she need submit any business account etc.. in her initial t1g and extension she only submitted payslips ans p60s and she is not a director of company any more as the company has been sold to a british in 2012 but she still work in that company.

Assuming your friend is a main applicant, 1 year maternity is not a problem.
Please tell your friend to take a child's birth certificate that shows the applicant name as mothers name and the financial year where there is no income or salary missing.
In some cases, UKBA May ask to prove with documentation from her employer that states maternity period of leave.

[sheraz_aries]

For Tier 1 General 5 year employed route, do HO still check tax records with HMRC? was wondering as if your work in a company then you already get tax deducted by employer before you get salary each month in your account

HO will not and cannot check with HMRC or companies house records. Under normal cases, they are not allowed to access your information without your permission. There are clear cases where HMRC and UKBA are permitted to share information but they mainly are from a law enforcement perspective.

UKBA does not have permission to access an applicant records held in other computer systems. If anyone in these forums claims UKBA computer systems and HMRC computer systems are linked for personal records - then they are lying. All government departments adhere to strict data protection and privacy rules.

That is the reason why a candidate is expected to take the right set of original documents for extension application or ILR. They qualify only on individual merit. Simple.

IF you work in a company, yes you get a tax deducted salary every month. At the end of tax year, you will also get a statement that shows the tax paid for the financial year. Its called P60. So that statement is an important document that proves how much tax you paid. UKBA cannot access that information from HMRC records, hence you have to take the original proof with you on the day.

Then how the topic creator's friend got verified even though it was PEO appointment?

[Manka10]

UKBA cannot access that information from HMRC records, hence you have to take the original proof with you on the day.

Read the declaration part of the application form again, the question whether UKBA and HMRC computers are linked or not is irrelevant
UKBA can access any info they want about the applicant if they have any doubts
Your long and difficult to read posts won't change the way UKBA functions

[pinkpop]

My friend has 6 years p60s and all yearly income are met ho requirement except one year for maternity leave. Does she need submit any business account etc.. in her initial t1g and extension she only submitted payslips ans p60s and she is not a director of company any more as the company has been sold to a british in 2012 but she still work in that company.

Assuming your friend is a main applicant, 1 year maternity is not a problem.
Please tell your friend to take a child's birth certificate that shows the applicant name as mothers name and the financial year where there is no income or salary missing.
In some cases, UKBA May ask to prove with documentation from her employer that states maternity period of leave.

Will tell her get the certificate ready and even in the maternity leave she earn more than £14000. Her absences in whole 5 years around 60 days and all those absences are under annual leave, does she need prove a company letter to say it is annual leave or the payslips and p60s will be enough to prove it? Thanks a millon for answering me lots of question.

[vin123]

UKBA cannot access that information from HMRC records, hence you have to take the original proof with you on the day.

Read the declaration part of the application form again, the question whether UKBA and HMRC computers are linked or not is irrelevant
UKBA can access any info they want about the applicant if they have any doubts
Your long and difficult to read posts won't change the way UKBA functions

My long and difficult to read post

FYI, Declaration does not mean "consent to share" and "doubts" is basically on evidences you submit!!. So yes, they reject if they have doubts - and do not check other department records as they are legally not allowed to do so. Understood?

Here is the declaration you are talking about:

I understand that all information provided by me to the Home Office will be treated in confidence; that it may be disclosed to other government departments, agencies, local authorities, the police, foreign governments and other bodies for immigration purposes or to enable them toperform their functions; and that, if such bodies provide the Home Office with any information about me which may be relevant for immigration purposes, it may be used in reaching a decision on my application.

Example:

If you are a immigrant foreign drug trafficker (i.e a potential criminal) , then police, local authority and FCO will be after your immigration records. So they will and can access your records to perform their functions. Based on the records HO receives from them, (for e.g evidences) they can make "decision" to revoke your ILR status or arrive at a decision.

Is that difficult to read, Manaka10 ?

[smartkhan]

Your long and difficult to read posts won't change the way UKBA functions

+1

[vin123]

If you win, no need to explain. If you lose then you should not be there to explain.

So this forum is like a battleground for wining and losing - not helping others ???? LOL

[vin123]

Will tell her get the certificate ready and even in the maternity leave she earn more than £14000. Her absences in whole 5 years around 60 days and all those absences are under annual leave, does she need prove a company letter to say it is annual leave or the payslips and p60s will be enough to prove it? Thanks a millon for answering me lots of question.

Correct - P60 will be enough if she was paid in during the maternity period. That is usually treated as continuing in employment so as long a documentation exist for the same, HO will be happy to accept the same. Good luck to your friend.

[pinkpop]

Will tell her get the certificate ready and even in the maternity leave she earn more than £14000. Her absences in whole 5 years around 60 days and all those absences are under annual leave, does she need prove a company letter to say it is annual leave or the payslips and p60s will be enough to prove it? Thanks a millon for answering me lots of question.

Correct - P60 will be enough if she was paid in during the maternity period. That is usually treated as continuing in employment so as long a documentation exist for the same, HO will be happy to accept the same. Good luck to your friend.

Thanks vin123 your answers are much appreciated. All the best for your future