Cannot understand this new rule

[entrepreneur123]

Could someone can please explain this new rule?


Tier 1 (Entrepreneur) Migrants are restricted to working only for their own
business. A clarification is being made to confirm that this means they cannot
claim to be self-employed yet work in a de facto employment relationship with
another employer.

[entrepreneur123]

does this mean we cannot work as contractors? or i am mis-understanding this?

[NAR]

I think this is again to give them the flexibility to asses genuine and non genuine during extension request. Similar to all other gov. rules if you can prove you have fulfilled all the rules then they must give extension as they can't prove intention.

They may have discovered cases where they used a workaround if someone works for 1 or 2 employers and just sign with them contracting agreement so there is no Pay slips and such while in fact they are not contracting and just getting paid as a normal job without calling it an employment. A genuine contractor would need to show they have done business with a lot more companies or individuals over a three year period. and i believe there should be no problems in this case for genuine contractors that do business normally with many contracts before the extension.

[attahaas]

I believe the key here is to make a contract where your business is getting paid and NOT you in person. Let them pay or issue cheque in favour of your business and not you. Then you can withdraw salary from the revenue generated. Makes things much simpler for extension.

I am not sure if you have to open a business account if you are self-employed. Anyways, if you can then just open one in the name of your business.

[entrepreneur123]

From guidance policy page 49

Genuine Entrepreneur Activity (contract of service with another business)
A41. If you are granted leave to enter or remain as Tier 1 (Entrepreneur) migrant, your leave will prohibit you from engaging in employment except where you are working for the business which you have established, joined or taken over. You will comply with this restriction if, for example, you are employed as the director of the business in which you have invested, or if you are working in a genuinely self-employed capacity. In this capacity you will have a contact for service.
You may not, however, be considered to be working for your own business if the work you undertake amounts to no more than employment by another business (for example, where
your work amounts to no more than the filling of a position or vacancy with, or the hire of your labour to, that business, including where it is undertaken through engagement with a recruitment or employment agency). In this capacity you would have a contact of service. This applies even if it is claimed that such work is undertaken on a self-employed basis.
In considering whether your work amounts to genuine self-employment (and is therefore work for the business which you have established, joined or taken over) or is in fact employment
by another business, we will take into consideration the factors set out at: http://www.hmrc.gov.uk/employment-status/index.htm#1.
If your work amounts to no more than employment by another business, we may consider you to be working in breach of your conditions of stay, and that you are therefore liable to curtailment of your stay and/or removal from the United Kingdom.

I believe the key here is to make a contract where your business is getting paid and NOT you in person. Let them pay or issue cheque in favour of your business and not you. Then you can withdraw salary from the revenue generated. Makes things much simpler for extension.

I am not sure if you have to open a business account if you are self-employed. Anyways, if you can then just open one in the name of your business.

[Mrchaany]

As per my understanding
One can not work through agency as a self employed in other business premises

[attahaas]

From guidance policy page 49

Genuine Entrepreneur Activity (contract of service with another business)
A41. If you are granted leave to enter or remain as Tier 1 (Entrepreneur) migrant, your leave will prohibit you from engaging in employment except where you are working for the business which you have established, joined or taken over. You will comply with this restriction if, for example, you are employed as the director of the business in which you have invested, or if you are working in a genuinely self-employed capacity. In this capacity you will have a contact for service.
You may not, however, be considered to be working for your own business if the work you undertake amounts to no more than employment by another business (for example, where
your work amounts to no more than the filling of a position or vacancy with, or the hire of your labour to, that business, including where it is undertaken through engagement with a recruitment or employment agency). In this capacity you would have a contact of service. This applies even if it is claimed that such work is undertaken on a self-employed basis.
In considering whether your work amounts to genuine self-employment (and is therefore work for the business which you have established, joined or taken over) or is in fact employment
by another business, we will take into consideration the factors set out at: http://www.hmrc.gov.uk/employment-status/index.htm#1.
If your work amounts to no more than employment by another business, we may consider you to be working in breach of your conditions of stay, and that you are therefore liable to curtailment of your stay and/or removal from the United Kingdom.

I believe the key here is to make a contract where your business is getting paid and NOT you in person. Let them pay or issue cheque in favour of your business and not you. Then you can withdraw salary from the revenue generated. Makes things much simpler for extension.

I am not sure if you have to open a business account if you are self-employed. Anyways, if you can then just open one in the name of your business.

Hmm, it's getting trickier.

So, even if the cheque is issued in the company's name, it still amounts to "contract of service" and not "contract for service", if the work you do amounts to more than employment by another business. Hmm, I guess it's similar to sacking existing employees and hiring new ones to show new employment created (discussed in another thread).

So, if someone really can get a contract like this and the billing is good, then he could hire an employee under his company's name to do the job for the client. Yes, you would have lesser profits, but it's better than risking extension.

Thanks for the link entrepreneur123.

[ishfaqsangra]

Does this mean that we can not carry on working for a single company/2 companies on longer contracts ,probably a year or so?

[Princess of Ammi]

it also directly and indirectly means leave being curtailed to those who are working with other employers on cash in hand bases(security guards etc.) whether they are or are not putting paid money through company account(having no contracts in place), subject to the nature of business working as self employed where they do not have contracts with clients specially Self employed taxi drivers under £50,000 route.

[entrepreneur123]

do this clarification applies to new applicants only or on old applicants who have got their visa already?

[hham1224]

Being an accountant, there are many people working like that. We call them as service companies and they fall within the definition of IR35 legislation. There are solicitors who write the contracts between director, agency and his company. So this is not a big deal.

My comments are from the HMRC point of view.

I hope this may help.

[entrepreneur123]

hmm but i think to be on safe side we should avoid such contracts, but problem is UKBA never explained this problem well in policy guidance before. So not sure if it apply to old applicants or new...but because its clarification so think apply all of us

[ishfaqsangra]

I think we should follow the guidance and make fixed amount contracts,work for different people, and include those HMRC guidance in every new contract at least as Terms and Conditions.

[entrepreneur123]

good idea. But what about contracts that we have already done or completed?

I think we should follow the guidance and make fixed amount contracts,work for different people, and include those HMRC guidance in every new contract at least as Terms and Conditions.

[ishfaqsangra]

does not matter ,those can be justified if one was still not having yes to "contract of services" questions.
I am going to make fixed payment per month contracts next time with all conditions as to work independently,and out put oriented.