Financial req: Compnay Director

[mustang390]

HI Does anyone know which category to tick for the Dividend income for the director of a limited company on VAF4A form ?

[gettcp]

Hi,

I have raised the same query couple of days ago but haven't had response yet. my view is as mentioned below

The only option we have left open is Cat F or Cat G.

According to guidance Cat G - use the average of the income received in the lat 2 full financial years to meet financial requirement i.e. in case if you can't meet in lat financial year you have this category by averaging last two full financial years.

If you have income - salary + dividends combined meeting financial requirements then Cat F.

For self-employed people (sole trader) it is easy and the application form relevant fields but where as Directory of the limited company who is drawing salary and dividends doesn't have relevant fields to enter the details. However the FM guidance shows there is a set of documents for Sole traders (9.5 & 9.6 sections - FM 1.7) and Director of limited company (9.7 & 9.8 - FM 1.7)

I guess for HMRC perspective there is a clear difference between self-employed and Director of the company for tax purposes where as UKBA does't have clue about it.

As we dont have relevant fields for Director of limited company, we have to use the existing fields and mention in covering letter, so
on VAF4a form, sections

3.49 - Yes
3.50 - Mention the date on you become the director of limited company
3.54 - Self-emplyed registration - NO
3.56 - Limited Company based in the UK

3.58 - Mention the Salary+dividends income (if you are meeting Cat F field)

Write up a covering letter or in the additional information field within application - that you are employed and drawing dividends and your supporting documentation for this.

The submit - SA302, CT600, PAYE registration document, VAT returns,...etc as pert guidelines for Directory of limited company.

last but not least, if UKBA is specific about the above, then they should follow how HMRC is differentiating between self-employed & Director of limited and update the application forms to reflect accordingly. If they keep same as today then there is no point asking lot of HMRC documents. Unfortunately we have to live with what we have right now

[mustang390]

Many thanks for your detailed explanation, its bit complected. I hope it won't confuse the (Baboos) clerks (Visa Officers) who love to reject Visas and never accept their fault unless you take them to court.

[vishal17jan]

Dear All,

I have a similar questions?

3.58 Category F -

i) How much income did your sponsor earn (before tax) from self employment in the last full financial year?>>

Above £18,600

ii) Does your sponsor’s self employment earnings (before tax) in the last full financial year meet or exceed the financial requirement you must meet?

Put a cross (x) in the relevant box - YES

If ‘Yes’ go to Part 3D

But when you go to Part 3D that is Income from non-employment sources. if we have satisfied the condition on Cat F then why we need to fill section 3D - Additional souces of income?

Please advise?

Many Thanks
Vishal

[abdulraheem123]

With dividends and salary payments, does it look odd that i withdrew random amounts from the company at random dates?.
i have not spoken to the accountant about this yet, but would like any opinions whether it looks normal to withdraw large dividends and salary for a few months consecutively and then none for like 8 months?

As i was unaware i will be applying for a visa my bank accounts are in a right mess, i withdrew random amounts (like over £10k) at a time in a few consecutive months then i didnt withdraw any money from the company accounts for over 8 months.

Would this look odd to the ECO or does everybody do this?

[Wanderer]

With dividends and salary payments, does it look odd that i withdrew random amounts from the company at random dates?.
i have not spoken to the accountant about this yet, but would like any opinions whether it looks normal to withdraw large dividends and salary for a few months consecutively and then none for like 8 months?

As i was unaware i will be applying for a visa my bank accounts are in a right mess, i withdrew random amounts (like over £10k) at a time in a few consecutive months then i didnt withdraw any money from the company accounts for over 8 months.

Would this look odd to the ECO or does everybody do this?

No, it's completely wrong and will set the ECO braincell into operation and check with HMRC etc...

You should be liaising with your accountant and drawing up the correct paperwork and dividend vouchers, you can't just draw out what you feel like.

This money you have withdrawn will be entered against your Directors Loan account and if it's not resolved and accounted for correctly you could end up paying 40% tax on it.

I recommend you get on this immediately and sort your paperwork out with your accountant and make sure you understand your position, especially wrt you and your Ltd's tax liabilities.

[mustang390]

With dividends and salary payments, does it look odd that i withdrew random amounts from the company at random dates?.
i have not spoken to the accountant about this yet, but would like any opinions whether it looks normal to withdraw large dividends and salary for a few months consecutively and then none for like 8 months?

As i was unaware i will be applying for a visa my bank accounts are in a right mess, i withdrew random amounts (like over £10k) at a time in a few consecutive months then i didnt withdraw any money from the company accounts for over 8 months.

Would this look odd to the ECO or does everybody do this?

No, it's completely wrong and will set the ECO braincell into operation and check with HMRC etc...

You should be liaising with your accountant and drawing up the correct paperwork and dividend vouchers, you can't just draw out what you feel like.

This money you have withdrawn will be entered against your Directors Loan account and if it's not resolved and accounted for correctly you could end up paying 40% tax on it.

I recommend you get on this immediately and sort your paperwork out with your accountant and make sure you understand your position, especially wrt you and your Ltd's tax liabilities.

Well its not that scary either, if you have sufficient funds available you can withdraw dividends and ofcourse accountant have to mention this in accounts you will prepare.

And the documents I sent this time weighs over 4 Kg (without photocopies)

[abdulraheem123]

No, it's completely wrong and will set the ECO braincell into operation and check with HMRC etc...

You should be liaising with your accountant and drawing up the correct paperwork and dividend vouchers, you can't just draw out what you feel like.

This money you have withdrawn will be entered against your Directors Loan account and if it's not resolved and accounted for correctly you could end up paying 40% tax on it.

I recommend you get on this immediately and sort your paperwork out with your accountant and make sure you understand your position, especially wrt you and your Ltd's tax liabilities.

Thanks for that advice Wanderer.
i got an appointment with the accountant next week, i was just trying to prepare for what he might do to with my accounts,
it good to know that a "Directors Loan account" is available as i can maybe use as an excuse as to why i withdrew large amounts

[abdulraheem123]

Well its not that scary either, if you have sufficient funds available you can withdraw dividends and ofcourse accountant have to mention this in accounts you will prepare.

And the documents I sent this time weighs over 4 Kg (without photocopies)

With these dividends that i withdraw from the company, does this show on my self-employed tax return? as i remember my accountant saying he has submitted my tax return in January 2014 with no tax to pay?? this is baffling me and i know i need to speak to the accountant about this but any ideas from anyone before i speak to the accountant

[vishal17jan]

Please advise if dividend will be considered as part of non-employment income to be filled in part 3D or salary + dividend will be entered in In Cat F - 3.58?

Thanks in advance