Tier 1 Entrepreneur Extension refused due to investment is not showing in accounts

[farhangul]

Our application for Tier 1 Entrepreneur Extension refused on the basis of investment, is not identifiable in accounts.

We applied our extension in team, 50K, in July 2017. Following is the detail of refusal:

Your application has been refused for the following reasons:

The evidence you have supplied in the form of unaudited accounts dated 2015, 2016, 2017 and July 2018 do not meet the requirements specified under the Appendix A of the immigration rules because they do not show the investment you have made by Director’s Loan as specified at 46-SD(a).

46-SD. The specified documents in paragraph 41(b) and 46 are as follows.
(a) The applicant must provide all the appropriate specified documents needed to establish the amount of money he has invested from the following list:
(i) If the applicant’s business is registered company that is required to produce audited accounts, the audited accounts must be provided;
(ii) If the applicant’s business is not required to produce audited accounts, unaudited accounts and an accounts compilation report must be provided from an accountant who is not the applicant and who has valid license to practice or practicing certificate, and who is member of a UK recognised supervisory body (as defined in the Companies act 2006);
(iii) If the applicant has made the investment in the form of a Director’s loan, it must be shown both in the relevant set of financial accounts provided, and through readily identifiable transactions in the applicant’s business bank statements, which must clearly show transfer of this money from the applicant to his business.
We have therefore been unable to award points for attributes (investment).

Important Notes:
We have been awarded all of other points. We provided following list of documents to support our investment:
1. Directors Loan agreement
2. Unaudited accounts of 3 years
3. Management accounts
4. Bank Statements of our Joint account for the funds invested
5. Business Bank statements for the relevant investment
6. Accountant letter showing break down of investment as Director Loan 54k and cash investment 18 k.

In our accounts, all of investment is shown under the head of ‘Other Creditors’

There are two important things to mention in our case. First is in the start of our business we spent some funds(around 18k) from our personal accounts for business transactions such as salaries, HMRC payments and some invoices. But as per accounts, that is also treated as investment but not acceptable for Visa extension. So our total investment through all channels is 72k which is reflecting in our accounts. But through Joint account to Business account it is 54k.

Second is there is typing mistake of date on management accounts provided, where title page is showing May 2017- July 2018, but actually that should have been May 2017- July 2017.

We need urgent help in this regard to sort this issue. Really don’t know what could be the exact problem? Any chances in AR?

[businesscons]

Sorry to hear about your refusal.
I think it shouldn’t be problem to win this in AR.
Obtain a letter from your accountant explaining other creditors and breakdown of other creditors and give to to your solicitor so that he explain it well in the language of law for AR.
According to companies house and HMRC director loan is always reflected in other creditors but UKVI states it should be mentioned seperately in accounts.
Attach the creditors breakdown in AR and you should be fine

[marcnath]

In our accounts, all of investment is shown under the head of ‘Other Creditors’

There are couple of questions that come to mind.

1. Does the accounts include your name anywhere to show that you are the "Other Creditor".
2. Does the DL clearly state it is subordinate to other creditors

[Ryan33]

Hi
Thanks for the valuable response. I wa unable to retrieve my account so just created this, please delete any other account belonging to me.

So, I’m joint applicant for this case.

There is no mention of director loan or any director name on the accounts, however we provided accountant letter separately confirming that other creditors include 51k as DL. Also a breakdown of DL with dates and amount shown in accountant letter.

Please also give your openion on How important that typing error is in our case. Thanks

[marcnath]

Hi
Thanks for the valuable response. I wa unable to retrieve my account so just created this, please delete any other account belonging to me.

So, I’m joint applicant for this case.

There is no mention of director loan or any director name on the accounts, however we provided accountant letter separately confirming that other creditors include 51k as DL. Also a breakdown of DL with dates and amount shown in accountant letter.

Please also give your openion on How important that typing error is in our case. Thanks

The April 2017 guidance states:

146. When evidencing the investment:
(1) The audited or unaudited accounts must show the investment in money made directly by you, in your own name or on your behalf (and showing your name).

The highlighted words have been removed in the latest guidance, but your application was rightfully evaluated against the guidance in place at the time of your application.

So it is not a typing error, unfortunately.

Also, the accountant's letter is not a specified document, so the CW does not have to depend upon it or even consider it.

You can try arguing that section 245AA (d)(i) should be applied - i.e even if the submitted document was not in the exact format, the information was contained in other documents submitted. And the CW should have requested for more documents or used their discretion to approve the application based on that information. The fact that those specific words have been removed now can also be used to argue further.

Good luck with your AR.

[Ryan33]

Thanks for your feedback marc. What are the chances of success if we use these arguments in AR.

Any other points we can add to support our AR.

[farhangul]

Sorry to hear about your refusal.
I think it shouldn’t be problem to win this in AR.
Obtain a letter from your accountant explaining other creditors and breakdown of other creditors and give to to your solicitor so that he explain it well in the language of law for AR.
According to companies house and HMRC director loan is always reflected in other creditors but UKVI states it should be mentioned seperately in accounts.
Attach the creditors breakdown in AR and you should be fine

Thanks businesscons.

What is your opinion about the typing error of wrong date in management accounts?

[farhangul]

Unfortunately, our AR has been refused, mentioning this detail that director loan must be shown in relevant accounts.

Now my questions to senior members are:

1. What will be chances if i go in JR?
2. My other member is varying his application but he will stay as director of company with his share, so this time i will be applying for extension for my self. In this case do i need to provide any additional documents?
3. Some body told me that according to new rules, both directors investment share should remain equal. Is it really true?
4. In fresh application, where and what should be mentioned in accounts to prove directors loan?

[marcnath]

Unfortunately, our AR has been refused, mentioning this detail that director loan must be shown in relevant accounts.

Now my questions to senior members are:

1. What will be chances if i go in JR? ==> In my opinion, very low
2. My other member is varying his application but he will stay as director of company with his share, so this time i will be applying for extension for my self. In this case do i need to provide any additional documents? ==> No
3. Some body told me that according to new rules, both directors investment share should remain equal. Is it really true? ==> True
4. In fresh application, where and what should be mentioned in accounts to prove directors loan? ==> Talk to your accountant. It doesn't matter where it is mentioned. Your name should be mentioned against the loan amount, that's all.

[farhangul]

Unfortunately, our AR has been refused, mentioning this detail that director loan must be shown in relevant accounts.

Now my questions to senior members are:

1. What will be chances if i go in JR? ==> In my opinion, very low
2. My other member is varying his application but he will stay as director of company with his share, so this time i will be applying for extension for my self. In this case do i need to provide any additional documents? ==> No
3. Some body told me that according to new rules, both directors investment share should remain equal. Is it really true? ==> True
4. In fresh application, where and what should be mentioned in accounts to prove directors loan? ==> Talk to your accountant. It doesn't matter where it is mentioned. Your name should be mentioned against the loan amount, that's all.

Thanks Marcnath for your immediate reply.

I will really appreciate you if you could give me any such link in recent guidance, showing equal share of investment by both directors, as i could not find something regarding all of this.

Second, to correct my accounts for identifiable investment, if i do following, will this work?

Other Creditors £xxxx

Notes: Other creditors include Director Loan from Mr. A & Mr. B for a sum of £xxxx. There is no interest charged on this loan and it will remain in place until such time as the company becomes sufficiently liquid to repay the loan.

Will it be ok? or i need anything else as well?

[marcnath]

Unfortunately, our AR has been refused, mentioning this detail that director loan must be shown in relevant accounts.

Now my questions to senior members are:

1. What will be chances if i go in JR? ==> In my opinion, very low
2. My other member is varying his application but he will stay as director of company with his share, so this time i will be applying for extension for my self. In this case do i need to provide any additional documents? ==> No
3. Some body told me that according to new rules, both directors investment share should remain equal. Is it really true? ==> True
4. In fresh application, where and what should be mentioned in accounts to prove directors loan? ==> Talk to your accountant. It doesn't matter where it is mentioned. Your name should be mentioned against the loan amount, that's all.

Thanks Marcnath for your immediate reply.

I will really appreciate you if you could give me any such link in recent guidance, showing equal share of investment by both directors, as i could not find something regarding all of this.

Second, to correct my accounts for identifiable investment, if i do following, will this work?

Other Creditors £xxxx

Notes: Other creditors include Director Loan from Mr. A & Mr. B for a sum of £xxxx. There is no interest charged on this loan and it will remain in place until such time as the company becomes sufficiently liquid to repay the loan.

Will it be ok? or i need anything else as well?

Immigration rules Clause 52(a) which reads:

52. Two applicants, but no more than two applicants, may claim points for the same investment, available funds, jobs created and business activity in Tables 4, 5 or 6 provided all of the following requirements are met:
(a) The applicants have equal level of control over the funds and (where relevant) equal status as owners, directors and/or members of the business or businesses in question.
....

While it does not exactly say that the investment amounts have to be equal, it will be difficult to say you have equal control if they are not.

That wording seems to meet the requirement

[farhangul]

Unfortunately, our AR has been refused, mentioning this detail that director loan must be shown in relevant accounts.

Now my questions to senior members are:

1. What will be chances if i go in JR? ==> In my opinion, very low
2. My other member is varying his application but he will stay as director of company with his share, so this time i will be applying for extension for my self. In this case do i need to provide any additional documents? ==> No
3. Some body told me that according to new rules, both directors investment share should remain equal. Is it really true? ==> True
4. In fresh application, where and what should be mentioned in accounts to prove directors loan? ==> Talk to your accountant. It doesn't matter where it is mentioned. Your name should be mentioned against the loan amount, that's all.

Thanks Marcnath for your immediate reply.

I will really appreciate you if you could give me any such link in recent guidance, showing equal share of investment by both directors, as i could not find something regarding all of this.

Second, to correct my accounts for identifiable investment, if i do following, will this work?

Other Creditors £xxxx

Notes: Other creditors include Director Loan from Mr. A & Mr. B for a sum of £xxxx. There is no interest charged on this loan and it will remain in place until such time as the company becomes sufficiently liquid to repay the loan.

Will it be ok? or i need anything else as well?

Immigration rules Clause 52(a) which reads:

52. Two applicants, but no more than two applicants, may claim points for the same investment, available funds, jobs created and business activity in Tables 4, 5 or 6 provided all of the following requirements are met:
(a) The applicants have equal level of control over the funds and (where relevant) equal status as owners, directors and/or members of the business or businesses in question.
....

While it does not exactly say that the investment amounts have to be equal, it will be difficult to say you have equal control if they are not.

That wording seems to meet the requirement

Thank you Marcnath for your valueable information.

[farhangul]

Dear Moderators

Reference to our first extension application refused and same again in AR due to investment not identifiable in accounts. We applied for JR then and at the first stage of PAP, they withdrawn it and sent it to reconsideration team. Here my question is that how long this process take and normally what kind of actions made? Second, meanwhile i sent my second extension application in July and so far i have got complex letter on that. So, what HO normally do, they run two applications in parallel timelines or hold one and proceed on the other?

[moongesture]

If you have launched PAP before JR and simultaneously another application (under Tier1-E) to get protected under 39E, your first application will be considered as valid after reconsideration by concern CW because technically your consideration process is pending.

[farhangul]

If you have launched PAP before JR and simultaneously another application (under Tier1-E) to get protected under 39E, your first application will be considered as valid after reconsideration by concern CW because technically your consideration process is pending.

Thank you moongesture.

[farhangul]

Dear Marcnath/ Zimba

Understanding the above matter, i have two questions/confusions:
1. If HO grant visa extension on my first application then will they refund my visa app fee for the second app, as that is not decided yet?
2. As they considered my PAP, what about our working rights now in our business? Are they back to normal now or we still cannot work till the final decision?

[marcnath]

Dear Marcnath/ Zimba

Understanding the above matter, i have two questions/confusions:
1. If HO grant visa extension on my first application then will they refund my visa app fee for the second app, as that is not decided yet?
2. As they considered my PAP, what about our working rights now in our business? Are they back to normal now or we still cannot work till the final decision?

That is an odd situation.

You cannot have two applications pending at the same time.

The guidelines say:

Simultaneous applications
An applicant cannot submit simultaneous applications; only one form of leave can be granted at any time. If an applicant attempts to submit more than one application on the same day, you must normally write to them to explain that only one application can be decided at a time and to ask them to indicate which application they would like to be considered and which application(s) they would like to withdraw. If they do not respond, you must reject all applications as invalid. If they do respond, you must mark as withdrawn the application they have said they wish to be withdrawn, and return the fee they have paid for that application.

Given that they have not withdrew the decision and agreed to reconsider, you should be covered under Section 3C, so all your rights under the original visa should continue.

It may be a good idea to write to HO and tell them which application you want considered and ask for the fees to be refunded for the other one.

[farhangul]

Thank you Marcnath for above response.

[farhangul]

We have got our BRPs after the decision made in our favour. I wanted to share it for other members knowledge that our investment in our accounts is recognised now. After the success in PAP, HO requested us for additional evidence to prove investment. We provided our Annual accounts, where our name was mentioned for 'Director Loan' and hence they accepted.

Dear Marcnath, now one another question is that, as stated before, how HO respond on our second application? Do we need to initiate any process to withdraw our second application and fee refund? Bearing in mind, HO refunded us IHS fee on second application, but nothing mentioned about visa fee!!!

[marcnath]

We have got our BRPs after the decision made in our favour. I wanted to share it for other members knowledge that our investment in our accounts is recognised now. After the success in PAP, HO requested us for additional evidence to prove investment. We provided our Annual accounts, where our name was mentioned for 'Director Loan' and hence they accepted.

Dear Marcnath, now one another question is that, as stated before, how HO respond on our second application? Do we need to initiate any process to withdraw our second application and fee refund? Bearing in mind, HO refunded us IHS fee on second application, but nothing mentioned about visa fee!!!

Thanks for the update.

This is definitely very positive that HO decided to exercise their evidential flexibility. The fact that one such case has been accepted should help others argue that they should be given the same consideration. HO has definitely gone down a slippery slope here, but it is good for future applicants.

You can write to HO and ask for the refund. There is no set process for that. Don't use the words "withdraw" though. If you withdraw your application, you are not eligible for refund.

[farhangul]

Thanks Marcnath for immediate response.

What address do you think shall i use to make refund request?

[Nana51113]

Dear farhangul

Congratulations for your BRP , please can I have your phone number I do have urgent inquiry

[marcnath]

Dear farhangul

Congratulations for your BRP , please can I have your phone number I do have urgent inquiry

Sharing personal contact details on this forum is against the rules