Tricky case about investing 50k in business

[divchopra]

Hello,

I am on my second year of tier 1 graduate entrepreneur visa right now and my visa finishes in 8 months. It was clear for me earlier to apply for a tier 1 entrepreneur visa after this but as the innovator visa has replaced this, i am confused on my position! I have read that people on tier 1 GE can still switch to tier 1 entrepreneur visa until mid 2023. But how to do so? When i enter the tier 1 entrepreneur link, it says that this route is now closed and you can’t apply. My question is how to apply basically? For a switch from tier 1 GE to tier 1 entrepreneur! Will it be a manual application? Where will i get the form if so?

Please help! Regards!

[marcnath]

Hello,

I am on my second year of tier 1 graduate entrepreneur visa right now and my visa finishes in 8 months. It was clear for me earlier to apply for a tier 1 entrepreneur visa after this but as the innovator visa has replaced this, i am confused on my position! I have read that people on tier 1 GE can still switch to tier 1 entrepreneur visa until mid 2023. But how to do so? When i enter the tier 1 entrepreneur link, it says that this route is now closed and you can’t apply. My question is how to apply basically? For a switch from tier 1 GE to tier 1 entrepreneur! Will it be a manual application? Where will i get the form if so?

Please help! Regards!

Have you tried this - https://visas-immigration.service.gov.u ... trepreneur

[divchopra]

Hello,

I am currently on tier 1 graduate entrepreneur visa. I want to switch to Tier 1 entrepreneur visa and i am suppose to maintain a balance of £50000 for 3 months. Now my question is, can i maintain this balance abroad in India? And still apply from Uk. Or is it mandatory to maintain the balance in UK banks? I am currently in Uk and i want to apply from here. Also if i can, what is the formality then? Do i need to get a letter from bank abroad stating something specific. If anyone can share a format in that case, i will be really thankful.

[zimba]

NO. See Table B from the guide: https://assets.publishing.service.gov.u ... -_0319.pdf

[divchopra]

NO. See Table B from the guide: https://assets.publishing.service.gov.u ... -_0319.pdf

Thanks for your reply Zimba. Can i still go to India and apply for leave to enter then? I am still on tier 1 GE visa till february. And if i decide to do so, what are the formality in terms in bank letter?

Also if i apply for a switch to tier 1 ent, does it have to be while i am on tier 1 GE visa or can i switch to tier 1 ent after my Tier 1 GE has finished too?

[CR001]

You must apply within the UK to switch. You MUST apply before your Tier 1 GE visa expires. Tier 1 Entrepreneur visas are no longer available to apply for outside the UK.

https://www.gov.uk/tier-1-graduate-entrepreneur-visa

[divchopra]

Hello,

I want to ask if the 50k fund can be withdrawn fully or partly once we have made the application? Or are we suppose to keep it in tact till the time your get the result?

Thanks in advance.

[CR001]

For what purpose do you want to withdraw it??

It should remain intact until your visa is granted.

[marcnath]

Hello,

I want to ask if the 50k fund can be withdrawn fully or partly once we have made the application? Or are we suppose to keep it in tact till the time your get the result?

Thanks in advance.

You can use it for your business expenses.

[divchopra]

Hello,

I got my Tier 1 entrepreneur visa this year around march. I showed the £50k investment in my personal bank account and my visa was granted. Now just as a got my visa covid happened and i did not transfer the £50k to my business account as I had to use some of it for personal use and send some to my family. My business account already had some funds then which i could have used for business expenses if needed. I had also got a bounce back loan meanwhile of £20k. So what i did was use that 20k to pay for my business expenses such as purchase of materials worth £5000, about £1500 in marketing routes. I paid all the suppliers from my business bank account and got bills from them. I didn’t realise that this could all go in vain for my tier 1 entrepreneur extension as i used the money from bounce back loan to use for my business expense. My question is what can i do now? Will these bills even though genuine not be counted towards my investment? Also is it possible to transfer the £15k which are already in my business bank account to my personal account and again transferring them to my business account so I can use them to pay for my business expense and still be counted as investment? If not, what do I exactly do now to fulfil the criteria of investing £50k for me now? I really want to use the money that is already in my business bank account. Is there any way to do it?

[marcnath]

I don't have good news for you.
The requirement of a Tier1 visa is that you invest 50k of your personal money in to the business. Transferring money from your business to personal account and back does not meet that.
You will need to find other sources of funding.
By the way, you are already in default of the conditions of grant of your visa. One of the conditions is that you have to maintain access to the funds shown until it has been invested in to the business. And you have not done that. It is not something HO seems to be very strict about but you need to be aware of it.

[divchopra]

Thank you for your reply Marcnath. Sure. I actually do have a lot of fund in my personal account too. I took some out thinking it will be okay as i had £25000 total in my business bank account by then. £5k by way of sales and £20k bb loan. I will invest from my personal account then again. Can i do it over time in parts? Like £10k now and so on. Also Can i pay directors salary to myself if business is not making profits? I understand it won’t be counted for investment but i can put part of it again in business bank in cash (from my personal account) and use for my business expenses. Will that be okay? My business is genuine and I have been trading and there are stakeholders involved. I must have already invested £15k but turns out it won’t be useful. Also will those bills from suppliers be useless now?

[divchopra]

I don't have good news for you.
The requirement of a Tier1 visa is that you invest 50k of your personal money in to the business. Transferring money from your business to personal account and back does not meet that.
You will need to find other sources of funding.
By the way, you are already in default of the conditions of grant of your visa. One of the conditions is that you have to maintain access to the funds shown until it has been invested in to the business. And you have not done that. It is not something HO seems to be very strict about but you need to be aware of it.

Hello Marcnath thanks for your reply. I do have 50k funds with me. The BB loan is the extra that I wanted to use first but i understand i can't. I also want to ask is how do i transfer the money exactly ? Is it mere transferring the money from my personal account to business account and at the end of the year call it directors loan while filing my returns? Or is there any special requirement and method to be followed before transferring the cash (loan) from my personal account to business account ? Say I want to transfer 10k now as I have few payments to make to suppliers. Can i just transfer the cash straightaway?

[marcnath]

Hello Marcnath thanks for your reply. I do have 50k funds with me. The BB loan is the extra that I wanted to use first but i understand i can't. I also want to ask is how do i transfer the money exactly ? Is it mere transferring the money from my personal account to business account and at the end of the year call it directors loan while filing my returns? Or is there any special requirement and method to be followed before transferring the cash (loan) from my personal account to business account ? Say I want to transfer 10k now as I have few payments to make to suppliers. Can i just transfer the cash straightaway?

Thank you for your reply Marcnath. Sure. I actually do have a lot of fund in my personal account too. I took some out thinking it will be okay as i had £25000 total in my business bank account by then. £5k by way of sales and £20k bb loan. I will invest from my personal account then again. Can i do it over time in parts? Like £10k now and so on. Also Can i pay directors salary to myself if business is not making profits? I understand it won’t be counted for investment but i can put part of it again in business bank in cash (from my personal account) and use for my business expenses. Will that be okay? My business is genuine and I have been trading and there are stakeholders involved. I must have already invested £15k but turns out it won’t be useful. Also will those bills from suppliers be useless now?

If you have 50K funds, you just need to invest it into your business any time prior to your extension application. It does not matter when and how you do it.

Nothing stops you from paying salary to yourself. As you said, that won't be counted towards the investment. But yes, if you put back the investment, it would work.

But I don't understand why you would do that. If you have money in your personal account to invest in, then why would you pay yourself salary instead of using the personal money you have for expenses. You just end up paying PAYE, NI, etc to just run the money in and out of the business.

[divchopra]

Hey Marcnath. Thank you so much for the amazing explanation. I asked about director salary cuz I thought one has to pay director a salary or dividend every year. And if my profits are not stable at this point, I would not pay any dividend. Also for long term I would like to take salaries from the company for my personal use. But i get your point, i was making things more complicated by mixing the business and formalities of Tier 1. Sorry about the confusion.

The other question I have is how do I transfer funds? Can i transfer £10k now in a day? As I have some payments to do to the supplier of material and a social media marketer. Till now I have been paying to stakeholders from the money i already had in my business bank account. I will transfer the £50k in parts as and when i need. So what’s the best way to transfer the fund say £10k now? Do i just transfer from my personal bank account to business account? Or is there something i need to do before i do that? And I am assuming this will be called directors loan so do i have to make agreement before transferring money or can i do it later? Also Will i need different agreements if i transfer the fund in parts?

[marcnath]

Hey Marcnath. Thank you so much for the amazing explanation. I asked about director salary cuz I thought one has to pay director a salary or dividend every year. And if my profits are not stable at this point, I would not pay any dividend. Also for long term I would like to take salaries from the company for my personal use. But i get your point, i was making things more complicated by mixing the business and formalities of Tier 1. Sorry about the confusion.

The other question I have is how do I transfer funds? Can i transfer £10k now in a day? As I have some payments to do to the supplier of material and a social media marketer. Till now I have been paying to stakeholders from the money i already had in my business bank account. I will transfer the £50k in parts as and when i need. So what’s the best way to transfer the fund say £10k now? Do i just transfer from my personal bank account to business account? Or is there something i need to do before i do that? And I am assuming this will be called directors loan so do i have to make agreement before transferring money or can i do it later? Also Will i need different agreements if i transfer the fund in parts?

You can transfer any amount of money anytime - not sure what is the restriction you are thinking of? If your bank has put some restrictions, talk to them - this has nothing to with immigration rules.

You can do the agreements later

[divchopra]

Thank you Marcnath. This has been really helpful. Just one last follow up question about the agreements. Say if i transfer £20k total this year in 3 parts. Can i make agreements at the end of the year together? And do I have to make a separate agreement for every time i transfer funds into my business account or just one agreement at the end mentioning the dates and amounts transferred is sufficient ? Is there any immigration rule about this I have to follow?

[marcnath]

Thank you Marcnath. This has been really helpful. Just one last follow up question about the agreements. Say if i transfer £20k total this year in 3 parts. Can i make agreements at the end of the year together? And do I have to make a separate agreement for every time i transfer funds into my business account or just one agreement at the end mentioning the dates and amounts transferred is sufficient ? Is there any immigration rule about this I have to follow?

There is nothing in the immigration rules about the timing and amounts.

[divchopra]

Thank you again for your reply Marcnath. But is it same about agreements? Like when i apply for my extension 2.5 years from now and provide a directors loan agreement which is mandatory, do HO expects different agreements for every time i transferred the funds? Or will one agreement which mention the funds and dates be okay for them? Sorry if this sounds like a repeated question but I am a little confused on the agreement side of things for immigration.

[marcnath]

Thank you again for your reply Marcnath. But is it same about agreements? Like when i apply for my extension 2.5 years from now and provide a directors loan agreement which is mandatory, do HO expects different agreements for every time i transferred the funds? Or will one agreement which mention the funds and dates be okay for them? Sorry if this sounds like a repeated question but I am a little confused on the agreement side of things for immigration.

It does not matter - one agreement or many

[divchopra]

Thank you very much for your help. Very kind of you! God bless you. Stay safe.