Tier 1 Investment of 200K

[benhuang]

Dear Zimba and Machart,

I invested into a franchise business spending 200K to buy franchise and its customers from a franchisor. A year later, the business did not work and the franchisor refused to return the money. What should I do now?

If I go to set up another business and employ 2 full time staff without investing 200k again, do you think i am eligible for the extention?

I look forward to hearing from you all.

Thanks a lot

Ben

[zimba]

Money spent purchasing a business is not accepted as a form of investment. This is clear in the rules.
You need to show fresh 200K investment. If you created any jobs before in your first business, you still can claim them towards your extension

[benhuang]

Dear Zimba,

Thanks for your reply.

The money (200k) was spent to pay for the rights to use the name for the next 10 years, to get the technical support and to access to the business customers base in order to sell product and services to the customers, etc. A new company was set up. We injected 200k into the new company and this company handles the above transactions.

Are the above transactions considered as buying a business?

Please advise.

Thanks

Ben

[zimba]

Well the guide says:

‘Invested’ or ‘spent’ excludes spending on:
buying the business from a previous owner, where the money ultimately goes to that previous owner (irrespective of whether it is received or held directly or indirectly by that previous owner) rather than into the business you have bought. This applies regardless of whether the money is channelled through the business en route to the previous owner. For example, by means of you or your business purchasing ‘goodwill’ or other assets which were previously part of the business you have bought,

Money gone to the previous owner (the franchisor), even channelled through your company is still NOT acceptable.

[benhuang]

Dear Zimba,

Thanks for your comment.

Regards

Ben

[benhuang]

Dear Zimba,

Thanks again for your previous prompt reply.

This email is a continuation of the previous email to you.

As you said I need a fresh RM200K. Can I inject the fund on a staggered basis from now until few months before the expiry of the initial period of 3 years and 4 months? Is there any time limit for the 200K investment? (Note: my visa expiry date is 5/5/2019)

I already set up a new sole trader business doing both online selling of products and e-consulting services. Can I combine both activities under one sole trader business? (Note: I registered myself as a sole trader with HMRC within 6 months from date of first entry into the UK)


I look forward to hearing from you.

Thanks a lot.

Ben

[marcnath]

Dear Zimba,

Thanks again for your previous prompt reply.

This email is a continuation of the previous email to you.

As you said I need a fresh RM200K. Can I inject the fund on a staggered basis from now until few months before the expiry of the initial period of 3 years and 4 months? Is there any time limit for the 200K investment? (Note: my visa expiry date is 5/5/2019)

I already set up a new sole trader business doing both online selling of products and e-consulting services. Can I combine both activities under one sole trader business? (Note: I registered myself as a sole trader with HMRC within 6 months from date of first entry into the UK)


I look forward to hearing from you.

Thanks a lot.

Ben

To just go back to your original post, you mentioned you bought a franchise from a franchisor, not another franchisee. If so, depending on the agreements and the business nature, that could be a valid investment. For example, if the franchisor is giving franchises to other franchicees on same or similar terms, then it would not be considered buying a business. But I think that is not your case. You just seem to have bought out a business in full from the previous owner.

So, now you need GBP 200K (not RM). Yes, you can inject the money over time right up to your renewal application date. There are no time limits.

There are also no restrictions to the types of business you can do. It can be one or many. Just be wary of the fact that as it becomes more complex, there will be more questions asked at extension time.

[PeterLove2008]

Dear Zimba and Machart,

I invested into a franchise business spending 200K to buy franchise and its customers from a franchisor. A year later, the business did not work and the franchisor refused to return the money. What should I do now?

If I go to set up another business and employ 2 full time staff without investing 200k again, do you think i am eligible for the extention?

I look forward to hearing from you all.

Thanks a lot

Ben

1. Franchise business: In many cases, money spent to buy the right to operate using the franchisor's brand and the right to operate in a territory agreed, it can be "goodwill", thus it is the investment. But in your case, you bought an existing franchise business from the franchisor, so your investment is not counted towards T1E investment.
2. New business: You do not have to set up another business, meaning you can still use the same limited company to trade. It is just another income stream for your same company. But if you decided to set up a new company, it is easier to show your business/company history, I agree with you to set up new legal identity (sole trader or limited company).
3. Other legal issues: when a franchise business did not work, be careful with the legal stuff. because every franchise agreement signed is intended to protect the franchisor. you don't want to waste your entrepreneur spirit in such legal affairs. Suggest consulting franchise solicitors to help you to bring it to an end.
Good luck!

[benhuang]

Dear Marcnath/ PeterLove2008,

Thanks to both of you for the advice. I really appreciated it very much!

Regarding the point commented by Marcnath "There are also no restrictions to the types of business you can do". The business i am doing now (i.e online selling of products and e-consulting services) is not the same as the one I suggested in my business proposal at the time of application. I wonder how Home Office will view this? Will I be asked to justify why I changed the business plan?

The second question is 30 hour week (Monday to Friday) is considered as full time. On average, say 6 working hours per day on a 5-day week, may I know, does the 6 working hours include the one hour lunch break?

Kind regards

[marcnath]

Regarding the point commented by Marcnath "There are also no restrictions to the types of business you can do". The business i am doing now (i.e online selling of products and e-consulting services) is not the same as the one I suggested in my business proposal at the time of application. I wonder how Home Office will view this? Will I be asked to justify why I changed the business plan?

I can't predict what HO will or will not ask to justify.
All I can say for sure is that changing the business is not in any way a violation of the immigration rules. In fact, the rules cater to the possibility that businesses may change.

The second question is 30 hour week (Monday to Friday) is considered as full time. On average, say 6 working hours per day on a 5-day week, may I know, does the 6 working hours include the one hour lunch break?

It is 30 hrs of paid work. The way HO checks this is to divide the salary paid (as shown in the FPS) by the hourly wage and check that it results in more than 30 hrs in a week or 130 hours in a month. How time spent by an employee is not something they bother about.

[PeterLove2008]

Dear Marcnath/ PeterLove2008,

Thanks to both of you for the advice. I really appreciated it very much!

Regarding the point commented by Marcnath "There are also no restrictions to the types of business you can do". The business i am doing now (i.e online selling of products and e-consulting services) is not the same as the one I suggested in my business proposal at the time of application. I wonder how Home Office will view this? Will I be asked to justify why I changed the business plan?

- as long as you genuinely run your business, you will be able to justify when asked to. No one can guarantee because even different case workers work slightly differently using their own discretions. Genuineness is the key here.
You mentioned that you decided to use new legal identity (sole trader) for your new business, in this case, it is clear to me that you have two businesses, but one didn’t work out. To me this is okay because entrepreneurs take risks and it’s normal if it didn’t work. But you can still use your new sole trader business to apply your extension, provided you meet all criteria.

The second question is 30 hour week (Monday to Friday) is considered as full time. On average, say 6 working hours per day on a 5-day week, may I know, does the 6 working hours include the one hour lunch break?

- no idea how you are going to pay your employees, but it really depends on the employment contract. If the lunch break is unpaid, then it shouldn’t regarded as working hours.

Kind regards

[benhuang]

Dear Marcnath/ PeterLove2008,

Thanks for your prompt reply. It really helps and give me a lot of insights.

I remembered I saw a statement some where on the website that 70% of the sole trader in the UK are actually having their office based at home. Would this be an issue with Home Office? or those renting an office space will have a higher chances of being approved at the time of extension of Visa.

I wish you all a very Merry Christmas and a Happy New Year!

Kind regards

Ben

[benhuang]

Dear Marcnath/ PeterLove2008/ other members,

I am still waiting for your reply. Thanks in anticipation.

I have further question regarding dependant. My visa going to expire in Year 2019, do I (as a dependant), need to be in the UK together with my family at the time of the extension?

Kind regards

Ben

[CR001]

My visa going to expire in Year 2019, do I (as a dependant), need to be in the UK together with my family at the time of the extension?

To apply for an extension, a dependent needs to be in the UK to apply with the main applicant. You cannot apply for 'extension' outside the UK, it is a new entry clearance visa from outside the UK.

[marcnath]

Immigration rules do not specify whether you should work from home or have an office. A CW can't reject your application based on that.
As to whether you chances are better is something no one can tell you. Personally, I don't think it matters - there have been plenty of approvals in this forum from people working from home.
Yes, dependants need to be in UK to apply for extension in the UK

[benhuang]

Dear Marcnath/ CR001,

Your comments are noted and thank you very much for that.

Regads

Ben

[benhuang]

Dear Marcnath/ CR001,

Regarding running business from home. A friend of mine has advised me that I need to get a letter from the landlord to confirm I am living in the property and running the business from there. May I know is this true? Would Home Office request for such a letter?

Thank you all in advance.

Kind regards

Ben

[zimba]

Dear Marcnath/ CR001,

Regarding running business from home. A friend of mine has advised me that I need to get a letter from the landlord to confirm I am living in the property and running the business from there. May I know is this true? Would Home Office request for such a letter?

Thank you all in advance.

Kind regards

Ben

Yes. Operating a business from a rented property must be authorised by your landlord

[marcnath]

Dear Marcnath/ CR001,

Regarding running business from home. A friend of mine has advised me that I need to get a letter from the landlord to confirm I am living in the property and running the business from there. May I know is this true? Would Home Office request for such a letter?

Thank you all in advance.

Kind regards

Ben

Most standard rental agreements include a clause that says you cannot operate a business from the home - generally there are insurance, mortgage and other restrictions on the landlord that they pass on to you.

So, check your rental contract.

[benhuang]

Dear zimba88/ Marcnath,

Thanks again for your valuable input.

Noted both of your comments. I do not have a formal tenancy agreement with the landlord. In fact, the only tenancy agreement i have is a simple one-page agreement which has already expired in Yr2016 and I am still living in the property until now.

However, the landlord is willing to give me a confirmation letter stating "i am living in the property and i may run my business from home at my convenience"

Do you think I need a proper tenancy agreement for extension of my visa due in 2019?

Thank you again for your input!

Kind regards

Ben

[marcnath]

Dear zimba88/ Marcnath,

Thanks again for your valuable input.

Noted both of your comments. I do not have a formal tenancy agreement with the landlord. In fact, the only tenancy agreement i have is a simple one-page agreement which has already expired in Yr2016 and I am still living in the property until now.

However, the landlord is willing to give me a confirmation letter stating "i am living in the property and i may run my business from home at my convenience"

Do you think I need a proper tenancy agreement for extension of my visa due in 2019?

Thank you again for your input!

Kind regards

Ben

This would have nothing to do with immigration rules - the rules do not require you to have a tenancy agreement. Under UK law, once the original lease term expires you automatically go into an assured short term tenancy - there is no formal agreement needed.

[benhuang]

Dear zimba88/ Marcnath/ Others,

I am still awaiting for your reply regarding whether "I need a proper tenancy agreement for extension of my visa"

Sorry for my ignorant and thank you all in advance!

Kind regards

Ben

[benhuang]

Dear marcnath,

Sorry, I just noticed your comment on my query on "formal tenancy agreement" on 13/4/2018.

Thanks again for your comment.

Kind regards

Ben

[zimba]

No. You and your landlord can sign an amendement to the current agreement in order to authorise you to operate the business from the rented property

[benhuang]

Hi marcnath/ Zimba/ others,

Thanks to Marcnath/ Zimba and others for your valuable input in the past.

I have further queries as follows:

1.As informed earlier, I am now running a sole trader business and i think, in the UK, the business name is not registered anywhere with the government authorities. May I know how are we going to prove to Home Office that we are running that sole trader business? What documents do we need?

2. My business management accounts ends on 31/3 each year. The reason being it corresponds to the fiscal year 5/4. So the management accounts which I will submit to Home Office is for the period from 1 April 2018 to 31 March 2019. After the closing of accounts, I will get it finalized and signed off by qualified accountants in the UK preferably before 30/4/2019. Our visa is expiring on 5/5/2019, do you think my expected timeline pose a problem??

3. I don't have a clue where to search for a qualified accountant to prepare and sign off the audited accounts. Can you all give me advice on this? Does anyone know the estimated cost for doing this?



Thank you in advance

Kind regards

Ben