Tax confusion

[Killer14bean]

Hi,

I would be applying for my ILR in Jan'16, for which i am getting my documents in order. Before i proceed would like to give my background:

Tier 1 G granted - Jan 2011
Self Employment
Income showed - 36k
Tax paid on 36k

Tier 1 extension - Jan 2013
Self Employment
Income Showed - 36k split between 28th dec'11 to 10th dec'12

For the tax purpose i have declared more for both the tax years i.e. 2011-12 and 2012-13(tax year April-April while income spread over two separate tax years) and mentioned each and every invoice that i used for points to HO. However, from Jan'13 till 5th April'13 i had a genuine expenses on circa £15k and at the end of the year the tax was paid on the balance. The accounting was done by my accountant and i was told that it is completely normal. I have all the invoices of the expenses, and would like to reiterate that i did not miss or hide any of the invoices while declaring the tax to HMRC.

Post June 2013 i have been in full time employment and would be going for my ILR based on the full time employment and i easily qualify for the points. Since the tax computation is a complex activity i would like to know if this could have any impact on my application.

Thanks

[guaravd]

Hi,

I would be applying for my ILR in Jan'16, for which i am getting my documents in order. Before i proceed would like to give my background:

Tier 1 G granted - Jan 2011
Self Employment
Income showed - 36k
Tax paid on 36k

Tier 1 extension - Jan 2013
Self Employment
Income Showed - 36k split between 28th dec'11 to 10th dec'12

For the tax purpose i have declared more for both the tax years i.e. 2011-12 and 2012-13(tax year April-April while income spread over two separate tax years) and mentioned each and every invoice that i used for points to HO. However, from Jan'13 till 5th April'13 i had a genuine expenses on circa £15k and at the end of the year the tax was paid on the balance. The accounting was done by my accountant and i was told that it is completely normal. I have all the invoices of the expenses, and would like to reiterate that i did not miss or hide any of the invoices while declaring the tax to HMRC.

Post June 2013 i have been in full time employment and would be going for my ILR based on the full time employment and i easily qualify for the points. Since the tax computation is a complex activity i would like to know if this could have any impact on my application.

Thanks

Hi,
How much income did you show for your T1 extension ? I am getting bit confused here.

[Killer14bean]

I showed 36k from 28th Dec'11 to 10th dec'12

however paid tax on circa £15k for the year 2011/12 and £32k for the year 2012/13 which included all my invoices (used for extension) plus invoices before dec'11 and invoices beyond dec'12. I had some major expenses during Jan'13 to 5th April'13. I have all the TR documents, invoices, P60's from my employment.

[guaravd]

I showed 36k from 28th Dec'11 to 10th dec'12

however paid tax on circa £15k for the year 2011/12 and £32k for the year 2012/13 which included all my invoices (used for extension) plus invoices before dec'11 and invoices beyond dec'12. I had some major expenses during Jan'13 to 5th April'13. I have all the TR documents, invoices, P60's from my employment.

After deducting your major expenses what is the amount you paid tax on ?

[Killer14bean]

Apologies for the confusion.. i declared circa £15k for the year 2011/12 and paid tax on the same and declared £32k for the year 2012/13 and paid tax on £32- expenses i.e. £17k.

[ilrvisanow]

Find the money for the difference between "DECLARED" - "ACTUAL NET PROFIT" and pay it.
I know business have expenses that you sometimes can not account for but HO might see this big ddiference. Rest is upto you...just a simple advice.

[guaravd]

Apologies for the confusion.. i declared circa £15k for the year 2011/12 and paid tax on the same and declared £32k for the year 2012/13 and paid tax on £32- expenses i.e. £17k.

Based on the info you've give I am assuming that for 2012/13 you showed 32K to HO & claimed points on it. While filing the IT return you declared 15K to HMRC (because of your major expenses).

Now based on the above scenario HO will have conerns and they'll assume this as deception coz there is significant difference between the income you showed to HO & income you declared to HMRC.

I manage to get this text from other post - All business operations incur expenses. So HMRC allows an expense limit that you can claim on expenses as long as it is genuinely attributable to the total revenue it generated.
For e.g if a contractor worked away from home at a rate of £250 per day and claiming a hotel expenditure at £125 per night is not attributable, however a £50 claim may be attributable. UKBA will scrutinised at that level ONLY if there is massive difference between income and net profit in the case of self-employment, expenses claimed in self-assessment and the net tax paid.

[Killer14bean]

Hi,

Thanks for your inputs. For extension purpose i used £28k between 6th April 2012 till 10th Dec'2012. I had minimal expenses during this period, but had to scale up majorly for some work in the final 3 months of the tax year. I clear case of genuine expenses for delivery of work.

[Killer14bean]

What should be the next step then? I declared all the genuine income to HO for the period of 12 months, but while tax compilation the figures changed i.e. expenses that were outside the 12 months period. Not even slightest of change/manipulation was done by me while filing the tax returns.

[guaravd]

Hi,

Thanks for your inputs. For extension purpose i used £28k between 6th April 2012 till 10th Dec'2012. I had minimal expenses during this period, but had to scale up majorly for some work in the final 3 months of the tax year. I clear case of genuine expenses for delivery of work.

I am not denying the fact that your expenses are not genuine but what I am trying to put forth is how HO will percieve your case. The net taxable income you initially showed to HO changed significantly at the time of filing the returns. When HO will verify this with HMRC they'll get a different figure altogether. If these major expenses would have occured at the time of your extension then technically you wouldn't have qualified for the extension in the first place and HO has given this as a reason for rejection n the past.

Either you can hire a good lawyer who can fight well for your case or amend your returns upto a reasonable amount and pay the taxes.

[Killer14bean]

I am not denying the fact that your expenses are not genuine but what I am trying to put forth is how HO will percieve your case. The net taxable income you initially showed to HO changed significantly at the time of filing the returns. When HO will verify this with HMRC they'll get a different figure altogether. If these major expenses would have occured at the time of your extension then technically you wouldn't have qualified for the extension in the first place and HO has given this as a reason for rejection n the past.

Either you can hire a good lawyer who can fight well for your case or amend your returns upto a reasonable amount and pay the taxes.[/quote]

Exactly my point: Had the expenses occurred during the time of extension, but it did not. HO gave me points on my earnings for those 12 months which i duly considered while filing my tax returns. Its a bit confusing, to guarantee a steady income while doing self employment, if not then pay extra tax when you are not suppose to. Very tricky, so according to you it will be a concern for HO.

[Killer14bean]

If i have to amend the tax, is there a quicker way than to do it in writing?

[Jas2013]

If i have to amend the tax, is there a quicker way than to do it in writing?

when you are planning to apply?

[Killer14bean]

Jan'16

[guaravd]

If i have to amend the tax, is there a quicker way than to do it in writing?

Since it is 12-13 return you won't be able to do it online. You have send everything in writing. HMRC's current turn around is 3-4 months to amend manual return.

[Killer14bean]

Jesus! 2-3 months.. my visa expires in Jan'16.. it is so strange that even after working so hard and paying back into the system through heavy taxes i might have to struggle with HO. A genuine situation which would be perceived as deception by HO, what mattered was the points claimed for the income in those 12 months and a slight change in circumstances can cost a person his/her right to stay in the country.

[guaravd]

Jesus! 2-3 months.. my visa expires in Jan'16.. it is so strange that even after working so hard and paying back into the system through heavy taxes i might have to struggle with HO. A genuine situation which would be perceived as deception by HO, what mattered was the points claimed for the income in those 12 months and a slight change in circumstances can cost a person his/her right to stay in the country.

I know how frustrating it is.I think you shouldn't be worried about the HMRC time line...important is getting an acknowledgement from HMRC that they have received the amendement. Alternatively if you are confident enough that you can convince HO without amending the returns then go with your gut feeling. Take opinion of an expert immigration lawyer if required. All the best !!

[Killer14bean]

Thanks Mate. Really appreciate your inputs. I think i would go with what i have in hand, in dec 2013 they refused my wife's dependent visa and then approved it when i applied the second time with exactly the same documents. I would have gone after them had it been in the UK but considering the appeal timelines and hassle opted to re-apply with exactly the same documents. They need some cases like me who would genuinely ask them that if you cannot approve my case who has been in the country for a long time, is established and working for a huge MNC then you genuinely have to look into the entire process again.

But much appreciate your inputs, i would consult my accountant and a lawyer and take a call.. will keep you all posted.

[Killer14bean]

Hi,

I would like to know which value will be used for calculating the total earning by the case worker

In my salary slip i have two categories This Period and Year To Date:

This period is further classified into:

Total Gross Pay:
Gross for Tax:
Earnings for NI:

Year to Date is further classified into:

Total Gross Pay TD:
Gross for TD:
Tax Paid TD:
Earnings for NI TD:
National Insurance TD:

Thanks

[CR001]

What is your current visa and route through which you are applying for ILR?

[Killer14bean]

Tier 1 General, 5 years

[Killer14bean]

Can anyone clear the doubt?

[Killer14bean]

Hi,

I would be applying for my ILR in Jan'16 through 5 years continuous stay under tier 1 general. My wife joined me in Feb 2014 so i would be applying for her dependent extension along with my application. I would like to know if i can use same Set O form for her application or a separate application form will be required?

Thanks

[CR001]

Set(O) is for ILR. She doesn't qualify for ILR so no, you cannot use the same form. She needs the PBS Dependent form see here (click).

You will also need TWO separate appointments (hers a couple of hours after yours), if you are applying in person.

Separate forms need to be sent to the relevant addresses on the forms.

She will need to pay the immigration health surcharge before she applies for her extension.

[Killer14bean]

thanks for the information.