Extension application and investment rules

[Meesha]

Dear Forum memebers?
Thanks for all previous help. I have visa via PSW 50K route before April 2014. I have following questions

1: Can you hire people only after investing 50K? I have read it on this forum somewhere.

2: If above is not correct. Can you claim the salary paid to your worker as investment contributing to those 50K?

3: Are you required to pay salaries from your business bank account on monthly basis? or is there any other way of doing it?

4: Can people on ILR be hired to claim points?


Thanks a lot for your time.

Stay happy

[Entrepreneur9]

Dear Forum memebers?
Thanks for all previous help. I have visa via PSW 50K route before April 2014. I have following questions

1: Can you hire people only after investing 50K? I have read it on this forum somewhere.
You can hire staff anytime you want. Before investing or after investing, doesnt matter.

2: If above is not correct. Can you claim the salary paid to your worker as investment contributing to those 50K?
Yes salary paid to staff will be counted as investment

3: Are you required to pay salaries from your business bank account on monthly basis? or is there any other way of doing it?
Yes salaries are paid from business account. Paying other ways doesnt look genuine.

4: Can people on ILR be hired to claim points?
Yes


Thanks a lot for your time.

Stay happy

[zshaan21]

Hi there,

Staff salaries don't consider as an Investment. Please take professional advise regarding this but obviously it can't be an investment.

[samaygrg]

Hi there,

Staff salaries don't consider as an Investment. Please take professional advise regarding this but obviously it can't be an investment.

It does, except that is paid to director and to other required staff who are not settled people of UK.

[zshaan21]

Wow that's great stuff if salaries do count as an Investment, so let say we need to hire 2 people for minimum 30 Hrs PW.Lets suppose if we pay them @ 7.50 per hour

30 * 7.50= 225 per week
225 * 4 = 900 so prorata basis /month wise 950 * 12= 11,400 for 1 person and for 2 person = 11400 * 2= 22,800
this mean that out of 50 k we can settle 22 k approximately as an investment in term of salaries, also fulfil the requirement of 2 settled person employment creation.

However, as a accounting point of view salaries always do count as an expense.Please guys any other valuable advise would be highly appreciated.

Cheers,

[samaygrg]

Hi
Totally agree with what you said here. And we have done here in this forum quite a lot of discussion regarding this.
'The way INVESTMENT has been defined by THE HO is different than what you and me had read in our accounting theories and principles!!!', in other word, for the HO it is all about the SPENT total rational business expenses incurred during 3 yrs of time [excluded as written above] that you needed to run your business, for its development, growth and marketing.

Hope this makes sense.

[marcnath]

As pointed out, investment for this purposes is money spent for the business. Before the business can pay salaries, it has to have got that money from somewhere. So, in your example, before paying out 22800 on salaries, you have to "invest" that amount into the company. And of course, you should have had the proper records of having paid PAYE. etc.
To be clear, contract workers are not counted for your employment. So, if you are paying 7.50 Pr hr, there is the additional NIC at least to be paid. So you will land up "investing" more than 22800.

[whiteroses]

Hi
Totally agree with what you said here. And we have done here in this forum quite a lot of discussion regarding this.
'The way INVESTMENT has been defined by THE HO is different than what you and me had read in our accounting theories and principles!!!', in other word, for the HO it is all about the SPENT total rational business expenses incurred during 3 yrs of time [excluded as written above] that you needed to run your business, for its development, growth and marketing.

Hope this makes sense.

I contacted one of the largest City-based law firms, and a few of their solicitors frequently contact the Home Office. They told me that the confusion regarding 'investment' was because an old version of the guidance stated that the amount should be "fully used" in the business, but the wording was altered to simply say that the amount should be "used" in the business. The idea is that your funds should not just lie around in the business bank account and should actually be helping the business.
An applicant from this forum called SweetJane was able to get his visa extended even though he had not spent the entire £200K in three years.
I know there is a lot of uncertainty with regard to what counts as investment, and I am no longer sure that the entire amount really needs to be spent.

[samaygrg]

Yes, this is a real controversy.

Even Ho caseworker's decisions seem not to be consistent. In the same issue some gets rejected and some gets approved. It is not in our hands at all. Having said that what I think personally is, we just must follow the guideline to its best, that's all we can do.

[samaygrg]

As pointed out, investment for this purposes is money spent for the business. Before the business can pay salaries, it has to have got that money from somewhere. So, in your example, before paying out 22800 on salaries, you have to "invest" that amount into the company. And of course, you should have had the proper records of having paid PAYE. etc.
To be clear, contract workers are not counted for your employment. So, if you are paying 7.50 Pr hr, there is the additional NIC at least to be paid. So you will land up "investing" more than 22800.

Agreed, staff meant PAYROLL registered employees of the company.

[aliq09]

My bits...

Initially you have submitted a " Business Plan" which reflects your stages of business development and with development phases , Capital needs to be injected in to the business . I will take example of Software Development firm idea . Initially the investment will go in setting up a basic business structure and by that i mean People / employees and Commercial business resident address . Suppose this comes as £10000 ( i have included employee salary as HO guidance ) . Now comes a second phase of " hunting software projects" , for which you need to go to " Government" and Commercial companies to issue you a tender / contract to develop the software . Yes! in this phase you will do some business spend ( please note i haven't write expenditure) . To make every thing short , once your accountant will sit down to make your year end accounts , he will allocate " all the money spend" to specific headings under accounting rules and this will be exactly seen by HO CW as your business spend which as per guideline should exceeds £ 50000 or £ 200K or remain the same . You have been provided a threshold that you must invest in your business 50K or 200K in order to boost economy and job creation ( for which the Visa was created initially).

My idea here is IF YOU ARE 100% BUSINESS MAN AND DOING REAL BUSINESS , don't worry about any thing . HO thinks in general way how business works .. it's not a rocket science but you have to be REAL business person.... No personal feelings just an explanation how business work ....