Tier 1 general ILR application after tax ammendment

[shah23]

Hi,
Does anyone has got a complicated case like this in terms of earnings and tax?
My tax return figures in HMRC and HO will not match even if I do any tax amendments, the reason is because my 12 months earnings (declared to HO in my previous application for extension of Tier 1) were covering 2 tax years.
Earnings Period: Oct 2012- Sep 2013, which covers actually 2 tax years of 2012-13 and 2013-14
It shows half half tax years earnings to HO, the other half half earnings+expenses etc were not the part of application, in the second tax year 2013-14, I had more expenses, some losses plus business closure in the second half of the tax year after visa application.
Now the confusion is to do any amendments or not?
Is it objectionable by HO as the profit in the second half of the second tax year fell down with more expenses affecting the profit figure of the first half year (already declared to HO), although at the time of application all the figures were fulfilling the HO requirements.
Any suggestion and useful information will be appreciated.
Thanks

[noajthan]

To avoid confusion & jumbled responses, I have moved your question to its own thread (this one).

[shah23]

Thank you for it. I tried hard to find how to post a new thread for this query on this website but didn't find any link, don't know the reason but I am new to the website. Checked the FAQ but no success, just surprised why is it so complicated?
Anyway, can you help answering to the query I raised in that thread?
I will be thankful.

[cs95tdg]

Is it objectionable by HO as the profit in the second half of the second tax year fell down with more expenses affecting the profit figure of the first half year (already declared to HO), although at the time of application all the figures were fulfilling the HO requirements?

Reading through this, what is not clear is whether you would have fulfilled the criteria for your last application (e.g. Points awarded for earnings) with an amendment? Or would your earnings then reduce resulting in it going below the threshold for what you claimed points for? That would in all likelihood be a key question that you need to answer.

[shah23]

Is it objectionable by HO as the profit in the second half of the second tax year fell down with more expenses affecting the profit figure of the first half year (already declared to HO), although at the time of application all the figures were fulfilling the HO requirements?

Reading through this, what is not clear is whether you would have fulfilled the criteria for your last application (e.g. Points awarded for earnings) with an amendment? Or would your earnings then reduce resulting in it going below the threshold for what you claimed points for? That would in all likelihood be a key question that you need to answer.

The time when I applied the threshold was fulfilled, but total profit fell down after getting visa, I will make it simple by this example:
Threshold required for visa: £35000
12-months earnings made £35000 (threshold fulfilled, points awarded), period is Oct 2012- Sep 2013
12 months: Oct, Nov, Dec, Jan, Feb, Mar and April from Tax Year 2012-13
and April, May, Jun, July, Aug and Sep from Tax Year of 2013-14

15000 were made in 1st tax year 2012-13, and 20000 in 2nd tax year 2013-14. It fulfills the threshold of 35000 in 12 months period.
In second tax year later on after successful Tier 1 application: some more expenses were made with very less profit which decreased the total profit from 20000 to 16000 making the final accounts shown to HMRC as 16000 not 20000, but with HO it's 20000, because the accounts submitted to HO were before they were finally submitted to HMRC with the expenses not part of the first part of that tax year, although decreasing the total profit for that tax year.

Complicated? Trying my best to make it simple.
Simply the accounts shown to HO were not for one complete tax year but were parts of two tax years so even doing tax amendment to increase the profits figures for 2nd year, the figures of HO will not match with HMRC, as the second part of the 2nd tax year was out the period for which the earnings/profits were claimed to HO.
Now if the HO matches the figures, it will be ok for the first tax year 2012-13, but for 2nd tax year 2013-14 they will not match, because only half tax year was part of my application, not that complete year.
Your reply and understanding is appreciated.
Thanks in advance

[monty87]

@shah23

I understand your case and HO caseworker will also add two tax year figures to see if your claimed earnings of £35,000 for 12 months match or not. As its obvious that accumulated claimed earnings on HMRC for two tax years should at least be £35,000. As per your question on second half of earnings is concerned, I would suggest not to ammend anything and send expenses as evidence to demonstrate the discrepency was erroneous/genuine. HO will completely ignore ammendments and will class you as dishonest and impose 322(5). You will still have a strong case in JR as they are genuine expenses which has caused income variation. You need to explain it well.

[cs95tdg]

Is it objectionable by HO as the profit in the second half of the second tax year fell down with more expenses affecting the profit figure of the first half year (already declared to HO), although at the time of application all the figures were fulfilling the HO requirements?

Reading through this, what is not clear is whether you would have fulfilled the criteria for your last application (e.g. Points awarded for earnings) with an amendment? Or would your earnings then reduce resulting in it going below the threshold for what you claimed points for? That would in all likelihood be a key question that you need to answer.

The time when I applied the threshold was fulfilled, but total profit fell down after getting visa, I will make it simple by this example:
Threshold required for visa: £35000
12-months earnings made £35000 (threshold fulfilled, points awarded), period is Oct 2012- Sep 2013
12 months: Oct, Nov, Dec, Jan, Feb, Mar and April from Tax Year 2012-13
and April, May, Jun, July, Aug and Sep from Tax Year of 2013-14

15000 were made in 1st tax year 2012-13, and 20000 in 2nd tax year 2013-14. It fulfills the threshold of 35000 in 12 months period.
In second tax year later on after successful Tier 1 application: some more expenses were made with very less profit which decreased the total profit from 20000 to 16000 making the final accounts shown to HMRC as 16000 not 20000, but with HO it's 20000, because the accounts submitted to HO were before they were finally submitted to HMRC with the expenses not part of the first part of that tax year, although decreasing the total profit for that tax year.

Complicated? Trying my best to make it simple.
Simply the accounts shown to HO were not for one complete tax year but were parts of two tax years so even doing tax amendment to increase the profits figures for 2nd year, the figures of HO will not match with HMRC, as the second part of the 2nd tax year was out the period for which the earnings/profits were claimed to HO.
Now if the HO matches the figures, it will be ok for the first tax year 2012-13, but for 2nd tax year 2013-14 they will not match, because only half tax year was part of my application, not that complete year.
Your reply and understanding is appreciated.
Thanks in advance

I did understand what you referred to as earnings being spread across 2 financial years and that the profit had decreased subsequent to your application being approved.

What I was questioning was primarily whether your earnings would now be reduced to below the threshold for which you claimed points (As this may not necessarily have been the case, if for instance you had claimed points for earnings at a lower points threshold).

Based on your answer underlined here, what I gather is that you wouldn't have been awarded the points for the 35K threshold after the amendment. Because your actual earnings for that period after amendment would be £15K + £16K = £31K, which is in effect lower than the £35K points threshold.

Therefore my conclusion would be that the amendment you are now considering would raise more questions and a review of the original leave that was granted to you under the PBS system.

[shah23]

Based on your answer underlined here, what I gather is that you wouldn't have been awarded the points for the 35K threshold after the amendment. Because your actual earnings for that period after amendment would be £15K + £16K = £31K, which is in effect lower than the £35K points threshold.
Therefore my conclusion would be that the amendment you are now considering would raise more questions and a review of the original leave that was granted to you under the PBS system.
[/quote]d

Reply:
The earnings were decreased, but at the time of application the profits for 12 months period were fulfilling the threshold, i.e 35000.

Let me clarify, the amendment will not decrease the threshold from 35k to 31k, it's already been reduced from 35 to 31 in my accounts for 2 years with HMRC, the amendment now I am considering with HMRC is to increase the profit/tax for the 2nd year so not to go below the 35k threshold even at the end of the year to make the case stronger. But at the same time I think I don't need the amendment because my case will be still genuine if the threshold of 35k was decreased after the Tier 1 application period due to expenses. Now, confused to do the amendment or not, and in which case will it be more strong? Doing amendment itself can lead to deception charge, but having expenses later on in the year is a possibility in a business, and the threshold was fulfilled anyway at the time of application.

No one knows the future and future losses/expenses can make your pocket empty, it can affect the final/ending financial accounts negatively.
Do you think the HO will make it as basis of not fulfilling the threshold? I think they shouldn't expect/require people to have the same or more profit at the end of the tax year as well which was at the start of the tax year regardless of fulfilling the threshold at the time of application.
Will it not be out of the 12 months period accounts the HO is concerned?
Thanks for understanding.

[shah23]

@shah23

I understand your case and HO caseworker will also add two tax year figures to see if your claimed earnings of £35,000 for 12 months match or not. As its obvious that accumulated claimed earnings on HMRC for two tax years should at least be £35,000. As per your question on second half of earnings is concerned, I would suggest not to ammend anything and send expenses as evidence to demonstrate the discrepency was erroneous/genuine. HO will completely ignore ammendments and will class you as dishonest and impose 322(5). You will still have a strong case in JR as they are genuine expenses which has caused income variation. You need to explain it well.

Reply:
Thanks for the feedback.
So I assume you suggesting to leave the case as it is with 31k earnings with HMRC, and not to do any amendments as the expenses later on in the same tax year shouldn't affect my case negatively but and tax/HMRC amendment can take it to dishonesty?

[monty87]

@shah23

As you already are well aware that tax year and calendar month income can differ due to various reasons like profit/loss, expenses incurred etc so I would suggest to keep it real and explain why there is a difference of income (its not really classed as a discrepency) unless home office thinks it is!

Send breakdown of expenses alongwith bank statements to prove genuine exoense incurred. I don't think in legal terms it should be classed as deception or income fabrication as you have provided evidence of difference.

[Wanderer]

How come the £4k 'expenses' were not accrued for in the accounts at first? That amount of additional unexpected expenses suddenly appearing and not accrued for is somewhat incredulous. Alright, 2-300 quid maybe, but not £4k.

I'm sure what UKVI are thinking is inflate income for extension, then 'find' some expenses after grant and reduce the tax bill. Seems a lot if T1G'ers have done this and are now paying the price.

Must admit it's hard to deny.

[monty87]

There are 6 months (sep 2013-april 2014) remaining until end of tax year April 2014 and there could potentially be £4000 worth of expenses. If you had self-employment expenses, you had expenses. Simple.

[noajthan]

There are 6 months (sep 2013-april 2014) remaining until end of tax year April 2014 and there could potentially be £4000 worth of expenses. If you had self-employment expenses, you had expenses. Simple.

The latter six months would fall into OP's subsequent tax year. So any expenses in that period should figure in the P&L for that subsequent year's accounts and not detract from the first year.

And, unless (or even if) OP was running something as simple as a lemonade stand or ice cream van, whatever happened to accruals?!

[shah23]

How come the £4k 'expenses' were not accrued for in the accounts at first? That amount of additional unexpected expenses suddenly appearing and not accrued for is somewhat incredulous. Alright, 2-300 quid maybe, but not £4k.

I'm sure what UKVI are thinking is inflate income for extension, then 'find' some expenses after grant and reduce the tax bill. Seems a lot if T1G'ers have done this and are now paying the price.

Must admit it's hard to deny.

Reply:
12 Months: The expenses in the first 6 months were 3500, and for the next 6 months were 2k, which have already been deducted before making 35k profit.
Then after application, 4k expenses in next 6 months of 2nd tax year with very small profit and business closure. It's not something sudden, little varied though.

Total earnings: 40500 - 5500 (expenses for 12 months) = 35000 - 4000 (expenses for rest part of the year after application) = 31000
I think it can be little unusual but not very unusual where the expenses were not fixed in my type of business.
It's complicated and will be hard to clarify to the HO although it's not hard for accounting/HMRC.
Or will it be better to do the amendment to HMRC and increase the profit/tax bill for 2nd year to clear the doubt on expenses and genuine income? Still there will be chances of deception charge as they doing with all amendments.
Thanks for going in details.

[shah23]

There are 6 months (sep 2013-april 2014) remaining until end of tax year April 2014 and there could potentially be £4000 worth of expenses. If you had self-employment expenses, you had expenses. Simple.

The latter six months would fall into OP's subsequent tax year. So any expenses in that period should figure in the P&L for that subsequent year's accounts and not detract from the first year.

And, unless (or even if) OP was running something as simple as a lemonade stand or ice cream van, whatever happened to accruals?!

Yes the further expenses were part of the second year P & L account as declared in the final accounts at the end of tax year to HMRC. They were not part of first year. As I said the business activities were stopped so no further accruals.
Issue is matching figures of HO with HMRC which is impossible in this case. The HO year for earning is different from the tax year of HMRC.

[cs95tdg]

Reply:
The earnings were decreased, but at the time of application the profits for 12 months period were fulfilling the threshold, i.e 35000.

Let me clarify, the amendment will not decrease the threshold from 35k to 31k, it's already been reduced from 35 to 31 in my accounts for 2 years with HMRC, the amendment now I am considering with HMRC is to increase the profit/tax for the 2nd year so not to go below the 35k threshold even at the end of the year to make the case stronger. But at the same time I think I don't need the amendment because my case will be still genuine if the threshold of 35k was decreased after the Tier 1 application period due to expenses. Now, confused to do the amendment or not, and in which case will it be more strong? Doing amendment itself can lead to deception charge, but having expenses later on in the year is a possibility in a business, and the threshold was fulfilled anyway at the time of application.

No one knows the future and future losses/expenses can make your pocket empty, it can affect the final/ending financial accounts negatively.
Do you think the HO will make it as basis of not fulfilling the threshold? I think they shouldn't expect/require people to have the same or more profit at the end of the tax year as well which was at the start of the tax year regardless of fulfilling the threshold at the time of application.
Will it not be out of the 12 months period accounts the HO is concerned?
Thanks for understanding.

My initial understanding of your post appears to have been incorrect. If you are now considering making an amendment to reverse the 4K expenses deduction you made previously (purely for the purposes of your Ilr application, with the intent of avoiding deception allegations by the HO) I'd certainly not recommend that, as it would indeed then be a false amendment.

I honestly cannot give you an answer to the question you have. The Tier 1 General immigration route was abolished due to those who misused/abused that immigration route; and I can clearly see numerous topics on this forums with those experiences. Not every experience or background is the same, if your expenses were genuine, expenses claimed at the appropriate time, and amendments were also made at the appropriate time, all I'd suggest is that you clearly outline and explain the evidence you are submitting when you make your application.

Having searched the forum for a case similar to yours the closest I came across was the following (where expenses were deducted after the original application was approved), but it doesn't appear that the outcome of that application (vv76) has been shared on this forum.
http://www.immigrationboards.com/indefi ... l#p1184684

[Abc499]

Hi,

My tax return figures in HMRC and HO will not match even if I do any tax amendments, the reason is because my 12 months earnings (declared to HO in my previous application for extension of Tier 1) were covering 2 tax years.

Thanks

Nowhere UKVI says that UKVI claim figures and HMRC tax year figures should match. Immigration Directorate Instructions says

"Please note that because tax documents are usually produced at the end of a
fixed tax period they will not necessarily show the entire period for which the
applicant is claiming previous earnings unless they are for the exact period
claimed. An applicant should therefore be cautious about using these documents
unless he/she is sure they show the exact amount of earnings for which he/she is
claiming points."

So they are very much aware and do consider the earning claim considering this issue as for most applicant tax year and UKVI claim will not be same. what they looking for is, whatever you claimed is declared on that year. Not necessarily the tax year also it should be over the threshold.

[shah23]

So they are very much aware and do consider the earning claim considering this issue as for most applicant tax year and UKVI claim will not be same. what they looking for is, whatever you claimed is declared on that year. Not necessarily the tax year also it should be over the threshold.[/quote]
Reply:
You are right, appreciate the intelligent reply and thankful to other guys who responded to this thread, they have been really helpful.
Now I am thinking it is not that complicated the way I complicated it myself. The way HO is refusing cases is sometimes strange, but they doing it after a lot of people miss used it. That's made me over conscious about it. If they going to refuse it they can make a lot of reasons. If they go by the book then I think this case is not that much weak. But it will be extra headache in AR or JR with time consuming.
I know a few who haven't paid a singly penny tax, or never submitted returns, or amended all 5 years tax returns, or changed their income from 0 to 30000 in amendment with HMRC. All this looks totally dodgy hence refusals. At least in this case earnings declared to HMRC, paid tax and submitted accounts. HO should differentiate at least, now almost every case is going in refusal. Hope for the best for all.

[Abc499]

@shah23

I wish good luck for you. But if I put myself in your situation then probably I would make amendment to ensure that all the claimed amount declared in HMRC. even if you do not update UKVI about the amendment then still if the claimed amount tax paid that might help later if the decision goes wrong.

this is because: I have claimed 15+20=35K
tax declaration: 15+16= 31k
I do understand that for that particular claimed 12 month it was 35k, (later as you mention loss and because of this in tax year it comes to 16 instead of 20k). If it is on PAYE then we can prove easily which month how much we have got on Payslip but for Self-employment i think it will be really really difficult to prove that on that 12 month it was 35K.

it is not very much unlikely (specially current scenario) that case worker could make it simple in his/her way, claimed 35k tax paid 31K (15+16k).

[shah23]

but for Self-employment i think it will ... was 35K.
[/quote]
Sorry didn't get your point by saying this.

[cs95tdg]

"Please note that because tax documents are usually produced at the end of a fixed tax period they will not necessarily show the entire period for which the
applicant is claiming previous earnings unless they are for the exact period
claimed. An applicant should therefore be cautious about using these documents
unless he/she is sure they show the exact amount of earnings for which he/she is
claiming points."

Just sharing my interpretation of this statement, as its one that I'm familiar with, having applied under the Tier1 General route myself in the past. Because you are given several different options of evidence to prove the points claimed for earnings, they cautioned applicants from submitting end of year tax summaries, I.e. P60's because it would be difficult to match the two sources of evidence that an applicant is required to submit. E.g. Bank statements + P60 - because the latter does not have a matching breakdown that can be cross checked and verified against the bank statements, unlike monthly payslips where this is possible. Additionally, unless someone is using the exact financial year period towards their application a P60 is unlikely to be suitable evidence to support the period for which they are claiming points.

I've referred to the above statement several times over my initial tier 1 application, extension and ILR as its something that I used to decide the evidence I would submit for earnings during those applications. So my interpretation of the context appears somewhat different to what you have indicated below.