Taking back Director's loan before 5 year period

[Globe Trotter]

Greetings everyone,
My query is:
As an investment, I have given an unsecured loan to a company named ABC.
After getting Tier 1 Entrepreneur visa extension, can that investment (made as directors loan) be taken back from the company ABC?
Or do we need to complete total 5 years (after getting ILR) to take back that loan?
There is no specific clarity given on that by home office.

Does anybody has any clue?

Many thanks in advance.

[marcnath]

You hit the nail on the head - there is no specific guidance.
In principle, if your company has had revenues/profits to pay back the loan, I can't see anything HO can object to.

[sm12]

Could they consider it misleading, in case they do further checks post extension?
Or worse, what if they consider it deception?

They tend to be quite strict.

[marcnath]

Could they consider it misleading, in case they do further checks post extension?
Or worse, what if they consider it deception?

They tend to be quite strict.

I can't see the basis for arguing paying back a loan as fraud. There are many valid business reasons to want to keep a company's balance sheet clean of liabilities.
It may bring further scrutiny which may identify other things, but I can't see how repayment of DL on its own is a basis for rejection.

[sm12]

Could they consider it misleading, in case they do further checks post extension?
Or worse, what if they consider it deception?

They tend to be quite strict.

I can't see the basis for arguing paying back a loan as fraud. There are many valid business reasons to want to keep a company's balance sheet clean of liabilities.
It may bring further scrutiny which may identify other things, but I can't see how repayment of DL on its own is a basis for rejection.

Yes, I agree that on its own, it is not an issue.
I am just trying to determine how HO might look at this.

For example, even though self-employment account amendments are perfectly legal and accepted by HMRC, the Home Office has been rejecting Tier 1 General holders for amendments (even in cases where income was not overreported before and there was no deception). Some people have been rejected for being a 'threat' to the country over amendments!

Therefore, in this case, too, they might raise issues if the loan is paid back in advance, though it is perfectly legal. Especially as the investment made is one of the main reasons behind granting extension. They might raise concerns over money being paid back before the actual due date in the submitted agreement to the HO, and claim the applicant has deceived the HO.

I'm probably being overly cautious, but the HO is known to be harsh.

[CR001]

For example, even though self-employment account amendments are perfectly legal and accepted by HMRC, the Home Office has been rejecting Tier 1 General holders for amendments (even in cases where income was not overreported before and there was no deception). Some people have been rejected for being a 'threat' to the country over amendments!

Completely different visas and rules, best not to confuse them. Tier 1 General migrants exploited a loophole and are now paying the price for that. The majority of them have only done amendments immediately prior to applying for ILR when they realised they have messed up. Most of the cases had over stated income for visa extension purposes back in 2011/12/13.

It is highly likely that because of the abuse of Tier 1 General route, HO closed it down.

[sm12]

Completely different visas and rules, best not to confuse them. Tier 1 General migrants exploited a loophole and are now paying the price for that. The majority of them have only done amendments immediately prior to applying for ILR when they realised they have messed up. Most of the cases had over stated income for visa extension purposes back in 2011/12/13.

It is highly likely that because of the abuse of Tier 1 General route, HO closed it down.

Hi CR001

Thank you for your reply.
I mentioned it here because I saw a couple of cases on the ILR forum of people who had amended well before the ILR was due, but still got rejected. Though yes, it does seem like most amended just before the ILR was due.

[marcnath]

I agree. These are two different scenarios altogether.
In order to be able to take back DL without the company generating revenues/profits, the money should have been in the bank idling until it is withdrawn.
In that case, HO/UKVI has the means to reject/curtail the visa based on the fact that the money would not count as investment, so there is a protection against abuse of that.
"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. "

[crazy_ram]

Hi,
In real world of business director loan may be cleared (take money off the business) as long as business revenues are sufficient enough for day-to-day running of business, growth & expansion. How ever, for a Tier-1 (E) applicant I would recommend to keep director loan untouched until completion of 5 years (Even tough you have good business revenues to cover growth & expansion requirements).
Tier-1 (E) application consideration becoming more hostile and inhumane, one can't risk loosing 5 years of time, efforts and money if the withdrawal of DL causes any problem during settlement application.
Alternatively, you can take salary & dividends from the business profits which may cost you some extra money for taxes, but its a safe option.

All the best

[Globe Trotter]

Thanks everyone for your detailed and in-depth information.
It has certainly shed a lot of light on areas which were still in dark.
Thanks once again.