100K direct cash investment on another UK business but not work at the company as a director

[sjddnrl]

Dear all.


I am a bit confused about the Acceptable investment and the minimum requirement of visa extension.

1. I and my brother would like to be a team to apply for T1E.
2. I am in Pakistan (medical doctor) and my brother lives in Bahrain (IT Director).

3. We would like to invest 100K into a UK business for profit of 12% per year. We will not be directors in this company. They will carry on their current business and we will have no share and we will have no power to control their business operation.

They do home business. They do Laser Printer part design and outsource the manufacturing part. So, all products are made by 3rd parties in the UK & China, then, the manufactured parts are sold worldwide.
They are UK registered limited company and sole director with 3 other employees currently.

After the investment, this company WILL NOT create more jobs. With the investment, they will buy design tools and order the products with higher volume for lower price to increase the profit per unit.

We will not get any share and we will not be directors of this company. We will not get involved in the company operation. We will be pure investors and will get guaranteed profit of 12% per year.
We will invest 100K in this company and they will return 12K per every year.

(No extra employment from this company)



4. We would like to put another 140k (so it becomes in total of 240K) to open our own company and will have two or more full time employees in this new company. But profit is not guaranteed from this company.

(two new full time jobs will be created from this company.)



Q1. The most important question which is about the direct cash investment : Do we have to be directors of that company where we are going to invest on? Or is it also an acceptable investment by investing 100K into UK business only for pure investment purpose and will not get involved in their business operation at all? This is only for profit and it will help them to grow and will give us back good profit.

https://www.gov.uk/government/uploads/s ... ur-v19.pdf

At 71 pages, it says that the acceptable investment includes "Direct cash Investment".
But I am not sure whether we have to be directors of this company to say that it is a part of the acceptable investment?

Q2. We will get 12K profit every year. If we put the profit of 12k, generated from 100K invested into another UK business, into our own business where we will work as directors, can we say that it Is additional investment?

Q3. Will it be a problem if the company where we are going to invest the first 100K on is a home business?

Q4. If our own company (with 140K injection) does not spend enough (less than 200K), can we also combine the additional expenditure of another company where we put 100K as a pure investment on?

Q5. Buying stock is also considered as acceptable investment? I am not sure whether using the money from the investment pool (140K) to buy inventories is also considered as acceptable expenditure?

For instance, if we spend in total of 100k on wages / rent and machineries in the new company. And buy inventories for 30K each time and sell quickly, buy again and sell, repeat the process for 20 times during the first 3 years. So, total accumulated purchase value in inventories will become 600K where our actual investment is only 140K only.

In this case, what is the eligible spend? it does not matter whether the money has been spend or not? or only 100K is acceptable type of investment or eligible spend? or 140K?


Thank you for your help indeed.

Have a good day.

[marcnath]

We will not get any share and we will not be directors of this company. We will not get involved in the company operation. We will be pure investors and will get guaranteed profit of 12% per year.
We will invest 100K in this company and they will return 12K per every year.

You would be more of an investor rather than an entrepreneur in this case. You should consider Tier 1 (investor) visa.

4. We would like to put another 140k (so it becomes in total of 240K) to open our own company and will have two or more full time employees in this new company. But profit is not guaranteed from this company.
(two new full time jobs will be created from this company.)

This would qualify as your entrepreneurial venture.

Q1. The most important question which is about the direct cash investment : Do we have to be directors of that company where we are going to invest on? Or is it also an acceptable investment by investing 100K into UK business only for pure investment purpose and will not get involved in their business operation at all? This is only for profit and it will help them to grow and will give us back good profit.

While there is nothing that prevents you from making that investment, it will not qualify towards the investment criteria under T1E rules. You investment has to be either in the form of Share Capital or Director loan.

https://www.gov.uk/government/uploads/s ... ur-v19.pdf

At 71 pages, it says that the acceptable investment includes "Direct cash Investment".
But I am not sure whether we have to be directors of this company to say that it is a part of the acceptable investment?

As above. Strictly speaking you don't need to be Directors but in that case you would need to be shareholders. And some of the other documents needed may not be normally available to just shareholders.

Q2. We will get 12K profit every year. If we put the profit of 12k, generated from 100K invested into another UK business, into our own business where we will work as directors, can we say that it Is additional investment?

Again, the strict interpretation of the rules allow that.
But you need to show that you have access to 200K for your initial application and you may have to show that you have access to that money until it is actually invested into the business. So, you are not really going to need the profit from the other business to make up the investment.
That is to say, you can't show 200K for your initial application, then use that money for something else and make up the investment from the profits of the other business over three years.

Q3. Will it be a problem if the company where we are going to invest the first 100K on is a home business?

No

Q4. If our own company (with 140K injection) does not spend enough (less than 200K), can we also combine the additional expenditure of another company where we put 100K as a pure investment on?

There is no requirement that you need to have 200K of spend. You only need to spend what the business needs. They do mention that money in the bank is not considered investment but that is more to prevent abuse of the system.

Q5. Buying stock is also considered as acceptable investment? I am not sure whether using the money from the investment pool (140K) to buy inventories is also considered as acceptable expenditure?

Yes, that would be normal business expense.

For instance, if we spend in total of 100k on wages / rent and machineries in the new company. And buy inventories for 30K each time and sell quickly, buy again and sell, repeat the process for 20 times during the first 3 years. So, total accumulated purchase value in inventories will become 600K where our actual investment is only 140K only.

Inventory is not investment. The investment is CASH that goes into the business from you.

[sjddnrl]

Hi marcnath


Thank you for your advice indeed.
We have 200K but cannot make 2M. That is why we consider T1E route.
In this case, we will negotiate with the company where we are willing to invest the 100K into to get the required documents.


Regarding your advice on Q1, "While there is nothing that prevents you from making that investment, it will not qualify towards the investment criteria under T1E rules. You investment has to be either in the form of Share Capital or Director loan."

If we get 5% share from the company (in this case, our portion will be such small that we still have no control over the company at all and we will only get profit without being involved in their business operations and we will be able to sell the share back to them after we get ILR) and if they are willing to prepare all required document for us, will it qualify towards the investment criteria under T1E rule?

Or, We make our own ltd company and invest 200k-240k from our personal accounts into our own business account as a Director's loan. Then, the company invests 100K into another UK business for profit, will this 100K qualify towards the investment criteria under T1E rules?


Thank you for your advice indeed.

Have a good day.

[marcnath]

Regarding your advice on Q1, "While there is nothing that prevents you from making that investment, it will not qualify towards the investment criteria under T1E rules. You investment has to be either in the form of Share Capital or Director loan."

If we get 5% share from the company (in this case, our portion will be such small that we still have no control over the company at all and we will only get profit without being involved in their business operations and we will be able to sell the share back to them after we get ILR) and if they are willing to prepare all required document for us, will it qualify towards the investment criteria under T1E rule?
Or, We make our own ltd company and invest 200k-240k from our personal accounts into our own business account as a Director's loan. Then, the company invests 100K into another UK business for profit, will this 100K qualify towards the investment criteria under T1E rules?

You will find the following in the guidance:

‘Invested’ means that the funds have been put into businesses which you are running as self-employed or as a director or partner . ‘Invested’ or ‘spent’ excludes spending on:
3) putting money into businesses, other than those which you are running as self-employed or as a director, and

So, in general, they don't allow money put in for pure investment returns to count towards the investment attribute for T1E.

You may get away with either, but you will be taking a big risk.

Also, this is obviously not what the entrepreneur route is supposed to be used for. So, HO can reject your extension application or even curtail a visa already granted if they have reason to believe you are trying to game the system.
The general rules for refusal is very broad.
Grounds on which entry clearance or leave to enter the United Kingdom is to be refused
(1) the fact that entry is being sought for a purpose not covered by these Rules;


In my opinion, the clause above give very wide latitude to HO.

In short, you may get away with either, but you will be taking a big risk. It is your risk to take.