Tier 1 entrepreneur director loan investment

[myinfo]

Dear Members

Need your expert views on this important issue.

I applied my initial (Tier 1 entrepreneur) application in 2014 and received BRP in 2015. My extension is due in April 2018.

I showed investment of 50k in bank account from overseas (Pakistan). Once I got visa I decided to do investment in my COMPANY ACCOUNT. But I didn’t have account in GBP currency in Pakistan but my father had so I transferred all money to him and he sent me here in UK in my COMPANY ACCOUNT.
But now solicitor said money doesn’t come from my personal account to my business account so that not consider as an investment because that come from 3rd party (from my father account to my business account)?

And he said I have to do again 50k investment from my personal account to business account in the form of Director Loan.

1. Note: Accountant has already mentioned that the transferred money from my father as Director Loan Investment in 2014 & 2015 accounts and 2016 account have not submitted yet.
But now I have already started again the investment and did around 20k investment from UK personal account to company accounts (from March 2017-till today) and remaining will do till end of the year.
Can I say that the 50k transferred from my father as 3rd party transaction and can I change (previous accounts) investment made in 2014 & 2015 accounts?

2. Or can I pass a resolution and change my submitted accounts from Director Loan to Share Capital so I don’t need to re-invest 50k and use the transactions (50k) that my father transferred me but again I have already started again the investment and did 20k investment from UK personal account to company accounts (from March 2017-till today).

3. Which option is better in my case No. 1 or No. 2, which track I will precede further?

Please help me out and Thanks for your help.

[marcnath]

I showed investment of 50k in bank account from overseas (Pakistan)

I assume you showed access to funds, not investment.

But now solicitor said money doesn’t come from my personal account to my business account so that not consider as an investment because that come from 3rd party (from my father account to my business account)?

This is strictly not correct. What is the note against that investment in your business bank account statement - is it your name or your Dad's name. If it is your name, then you meet the requirement for proof of investment.

But there is a different requirement that you should have access to the fund THROUGHOUT the time between grant and investment. If the transfer to UK happened soon after you transferred to your Dad's account, it should be ok. But otherwise it may be a problem.

Can I say that the 50k transferred from my father as 3rd party transaction and can I change (previous accounts) investment made in 2014 & 2015 accounts?

Don't understand why you need to change anything ? If you are making new investment, there is no need to change any of the old investments.

Or can I pass a resolution and change my submitted accounts from Director Loan to Share Capital

Yes, accounts can be updated - but talk to your accountant about it.

Changing it to share holding is easier in terms of providing evidence - but the requirement to have had access to funds throughout does not change

[myinfo]

Thanks for reply marcnath

In my business bank statement it shows fund tranfer and my father name appears with each transaction because he sent to me.

But there is a different requirement that you should have access to the fund THROUGHOUT the time between grant and investment. If the transfer to UK happened soon after you transferred to your Dad's account, it should be ok. But otherwise it may be a problem.

actually the account was in PKR currency where I showed access to funds, so I gave to my father PKR and then he changed by himself from PKR to GBP and sent from his GBP account to UK my business account.
so in that process of conversion currency I didnt have THROUGHOUT access. what you say on that?

[marcnath]

Thanks for reply marcnath

In my business bank statement it shows fund tranfer and my father name appears with each transaction because he sent to me.

But there is a different requirement that you should have access to the fund THROUGHOUT the time between grant and investment. If the transfer to UK happened soon after you transferred to your Dad's account, it should be ok. But otherwise it may be a problem.

actually the account was in PKR currency where I showed access to funds, so I gave to my father PKR and then he changed by himself from PKR to GBP and sent from his GBP account to UK my business account.
so in that process of conversion currency I didnt have THROUGHOUT access. what you say on that?

So, the money sent by your Dad cannot be counted to your investment requirement.

Yes, during the conversion period, you did not have access and strictly speaking you are in violation of your terms. But unless this was for a period of many weeks or months, I don't think HO is going to bother. Even so, a proper letter from your father to state that he was only holding it on your behalf should meet the requirement.

Anyway, since those transfers cannot be used for DL investment, the safest approach would be record them as share purchases as and when they occurred and update the past accounts accordingly. But talk to your accountant about that - I am not totally familiar with the rules for correcting past accounts.

[myinfo]

hi marcnath
sorry to bother you again.

As per last conversation, actually your views are are really helpful just need your more guidence to get at final decision. you said in last message "the safest approach would be record them as share purchases as and when they occurred and update the past accounts accordingly"

1) If I change my submitted accounts from Director Loan to Share Capital what would be the my investment of 50k? or use the transactions (50k) that my father transferred me in 2014?

2) I have applied visa before April 2014 and got following year so I will fall in under pre-2014 rules? The question is in case of refusal will I have appeal right or come under new rule of administrative review/JR etc?

3) In case of share capital, will I need to invest some extra if Investment+revenue -salaries >=50K

waiting for your reply. thanks again

[marcnath]

As per last conversation, actually your views are are really helpful just need your more guidence to get at final decision. you said in last message "the safest approach would be record them as share purchases as and when they occurred and update the past accounts accordingly"

I'll correct that - you can convert those to share capital any time - you don't have to change the old accounts, just do the conversion in the current accounting year.

1) If I change my submitted accounts from Director Loan to Share Capital what would be the my investment of 50k? or use the transactions (50k) that my father transferred me in 2014?

You don't really trace which money is used for what. If you have 100K of DL and convert 50K to share capital, it really can't be determined which one is which.

2) I have applied visa before April 2014 and got following year so I will fall in under pre-2014 rules? The question is in case of refusal will I have appeal right or come under new rule of administrative review/JR etc?

Yes, you are under pre-2014 rules, but that is only for Job creation criteria. Everything else is as per current rules.

3) In case of share capital, will I need to invest some extra if Investment+revenue -salaries >=50K

Yes, that does not change whether it is DL or share capital

[myinfo]

Thanks for you help. You have been really helpful.
Last question are

myinfo wrote: ↑Wed Sep 27, 2017 7:50 am
3) In case of share capital, will I need to invest some extra if Investment+revenue -salaries >=50K

Yes, that does not change whether it is DL or share capital

You don't really trace which money is used for what. If you have 100K of DL and convert 50K to share capital, it really can't be determined which one is which.

If we don't really trace then how we calculate like investment+revenue-salaries>=50k
Here I assume 50k as investment?+revenue-salaries >=50k

2) Wed Sep 27, 2017 7:50 am
As per last conversation, actually your views are are really helpful just need your more guidence to get at final decision. you said in last message "the safest approach would be record them as share purchases as and when they occurred and update the past accounts accordingly"

I'll correct that - you can convert those to share capital any time - you don't have to change the old accounts, just do the conversion in the current accounting year.

Means don't need to even change the old accounts just do conversion in the current year and next year?

[marcnath]

3) In case of share capital, will I need to invest some extra if Investment+revenue -salaries >=50K

Yes, that does not change whether it is DL or share capital

You don't really trace which money is used for what. If you have 100K of DL and convert 50K to share capital, it really can't be determined which one is which.

If we don't really trace then how we calculate like investment+revenue-salaries>=50k
Here I assume 50k as investment?+revenue-salaries >=50k

What I meant is that you can't differentiate whether it is investment made in 2015 or 2017 that is converted into share capital, if you do the conversion now.

2) Wed Sep 27, 2017 7:50 am
As per last conversation, actually your views are are really helpful just need your more guidence to get at final decision. you said in last message "the safest approach would be record them as share purchases as and when they occurred and update the past accounts accordingly"

I'll correct that - you can convert those to share capital any time - you don't have to change the old accounts, just do the conversion in the current accounting year.

Means don't need to even change the old accounts just do conversion in the current year and next year?

Yes, that is correct.

[myinfo]

Hi
One more thing, how many share we need to declare for 50k in share capital. We are 2 directors and partner on same visa.
Whether it will be 2 each for 25k or any other pattern.

[marcnath]

Hi
One more thing, how many share we need to declare for 50k in share capital. We are 2 directors and partner on same visa.
Whether it will be 2 each for 25k or any other pattern.

You can use any combination to satisfy the immigration requirement.

[myinfo]

Hi marcnath
Thanks for your help regarding accounts, really appreciate for that.

Now the Question is about RTI/FPS,

My accountant didn't mention any start and end date for employees on RTI/FPS. he been submitted regularly every month to HMRC. My both employees worked with me for a year or more and now both replaced, but on their RTI/FPS NO start/End date mentioned.

Do my accountant need to submit all previous RTI/FPS again to HMRC with start and leaving date of each employee? OR he is saying he will give cover letter and employment card for each employee with start/end date should also mentioned on that so we will stick cover letter and employment card on top of RTI/FPS and P11.

Please guide me on that issue. Thankyou

[marcnath]

Hi marcnath
Thanks for your help regarding accounts, really appreciate for that.

Now the Question is about RTI/FPS,

My accountant didn't mention any start and end date for employees on RTI/FPS. he been submitted regularly every month to HMRC. My both employees worked with me for a year or more and now both replaced, but on their RTI/FPS NO start/End date mentioned.

Do my accountant need to submit all previous RTI/FPS again to HMRC with start and leaving date of each employee? OR he is saying he will give cover letter and employment card for each employee with start/end date should also mentioned on that so we will stick cover letter and employment card on top of RTI/FPS and P11.

Please guide me on that issue. Thankyou

I am no expert on accountancy or on RTI software, but my understanding is that almost all RTI software automatically includes the start and end dates, as applicable. HMRC needs that information, so your accountant has definitely included that in his/her submission to the HMRC - so there is something fundamentally wrong in "My accountant didn't mention any start and end date for employees on RTI/FPS".
Whether and how that is actually printed on the FPS reports seems to differ on the software used. Generally they seem to print it only on one of the reports - the month when it was reported to HMRC, which is sometimes the month before the employee started. So, make sure you have checked the specific FPS reports.

On the second point, which is more of an immigration matter, it is very clear the HO will not accept an accountant's letter instead of FPS for start date/end date evidence.

So, you and your accountant need to find another solution - most probably using a different software

[myinfo]

Hi Marcnath

I have just go through the application form, In question L4 do we need to to provide both documents below:

L4. Please tick to confirm you have provided the appropriate evidence to demonstrate your registration:

HM Revenue & Customs documentation

Companies House documentation

THANK YOU

[marcnath]

You only need to provide one. You can provide both if you want to - but check the box for the one you have provided

[myinfo]

Hi Marcnath

Same thing comes up again, As you know according to our above discussion we have changed our accounts from director loan to share capital because if you read my very first question the investment (50k)
come to our company from my dads abroad account and that is not considering as investment.

so we have 2 options

• re-invest 50k to company account?

OR

• switch from director loan to share capital to justify 50k come from dads abroad account?

Am I right till here?

Yesterday I have asked with one consultant the same thing, he replied "Directors can buy share capital if they transfer director amount in their business account"
so its means we need to re-invest 50k so why we changed account from DL to share capital? any benefit of that apart we don't need to provide evidence (b.st) in share capital.?

Please guide me on that 20 points investment issue. Thankyou

[marcnath]

Hi Marcnath

Same thing comes up again, As you know according to our above discussion we have changed our accounts from director loan to share capital because if you read my very first question the investment (50k)
come to our company from my dads abroad account and that is not considering as investment.

so we have 2 options

• re-invest 50k to company account?

OR

• switch from director loan to share capital to justify 50k come from dads abroad account?

Am I right till here?

Yesterday I have asked with one consultant the same thing, he replied "Directors can buy share capital if they transfer director amount in their business account"
so its means we need to re-invest 50k so why we changed account from DL to share capital? any benefit of that apart we don't need to provide evidence (b.st) in share capital.?

Please guide me on that 20 points investment issue. Thankyou

Difficult to interpret what your consultant said - I don't understand what "director amount" is.

The right professional to advice you on converting DL to share capital would be an accountant.

[myinfo]

Hi Marcnath

1) Actually he was trying to say first we have to do the investment of 50K from director accounts to company account then we can switch to share capital from director loan. Is he right?

(if we re-invest 50k then problem will solved we didn’t need to go to share capital from DL.) our issue is there 50k come from my dad abroad account.

2) we have submitted confirmation statement according to director loan but we submitted accounts as share capital. Do we need to submit confirmation statement again for share capital?

Hope you get the point now. Waiting for your reply. Thank you

[marcnath]

Hi Marcnath

1) Actually he was trying to say first we have to do the investment of 50K from director accounts to company account then we can switch to share capital from director loan. Is he right? ==> I am not an accountant but it sounds right. But this is paper transfer not actual cash.

(if we re-invest 50k then problem will solved we didn’t need to go to share capital from DL.) our issue is there 50k come from my dad abroad account.

2) we have submitted confirmation statement according to director loan but we submitted accounts as share capital. Do we need to submit confirmation statement again for share capital?
==> Again this is confusing. A confirmation statement is supposed to confirm the accounts. So how can they be different ? Are you saying you submitted two accounts- one with DL And the other with Share Capital? And only the one with DL has a confirmation statement attached to it ? HO will likely only consider the accounts that has a confirmation statement
Hope you get the point now. Waiting for your reply. Thank you

[myinfo]

2) we have submitted confirmation statement according to director loan but we submitted accounts as share capital. Do we need to submit confirmation statement again for share capital?
==> Again this is confusing. A confirmation statement is supposed to confirm the accounts. So how can they be different ? Are you saying you submitted two accounts- one with DL And the other with Share Capital? And only the one with DL has a confirmation statement attached to it ? HO will likely only consider the accounts that has a confirmation statement

let me clear you for 2016 we have submitted confirmation statement earlier then accounts and submitted confirmation statement according to director loan but later when submitted accounts and we have changed accounts from DL to share capital. so the question was our confirmation is as director loan and accounts as share capital. so we need to change confirmation so both will match together?

[myinfo]

Other thing we have submitted 2014 and 2015 accounts as director loan but changed in 2016 to share capital.
but in the policy guideline it is mentioned must show the shareholders, the amount and value of the shares (on the date of purchase)

If you have invested by way of share capital, the business accounts must show the shareholders, the amount and value of the shares (on the date of purchase) in your name as it appears on your application. If the value of your share capital is not shown in the accounts, then a printout of the company’s register of members from Companies House must be provided. (Tier 1(Entrepreneur) Policy Guidance version 04/2017 - Page 47)

Do we need to changed the previous accounts 2014, 2015 from DL to share capital to put date of purchase? as in 2016 accounts there is no date of purchase mentioned.

[myinfo]

Hi Marcnath
sorry to bother you again
could you please explain what documents of employee we need to send as evidence to HO along with british passport?
Evidence that the employee is a settled worker (Tier 1(Entrepreneur) Policy Guidance version 04/2017 - Page 53)

[marcnath]

Hi Marcnath
sorry to bother you again
could you please explain what documents of employee we need to send as evidence to HO along with british passport?
Evidence that the employee is a settled worker (Tier 1(Entrepreneur) Policy Guidance version 04/2017 - Page 53)

If you have the passport copy, nothing else is needed

[marcnath]

2) we have submitted confirmation statement according to director loan but we submitted accounts as share capital. Do we need to submit confirmation statement again for share capital?
==> Again this is confusing. A confirmation statement is supposed to confirm the accounts. So how can they be different ? Are you saying you submitted two accounts- one with DL And the other with Share Capital? And only the one with DL has a confirmation statement attached to it ? HO will likely only consider the accounts that has a confirmation statement

let me clear you for 2016 we have submitted confirmation statement earlier then accounts and submitted confirmation statement according to director loan but later when submitted accounts and we have changed accounts from DL to share capital. so the question was our confirmation is as director loan and accounts as share capital. so we need to change confirmation so both will match together?

Few things to be just clear:
1. HO needs a compilation report, not confirmation report (though it is often the same). The guidelines says what the compilation report is - The accounts compilation report is a service whereby practitioners compile accounts for the company directors who are responsible for the preparation of the financial statements and for being satisfied they give a true and fair view. The accounts compilation report explains how practitioners have helped the directors prepare the accounts.
2. So, to repeat, the compilation report is for a specific accounts. So I am not sure how you sent the confirmation statement separately from the accounts. (anyway, who did you send it to ?)

[marcnath]

Other thing we have submitted 2014 and 2015 accounts as director loan but changed in 2016 to share capital.
but in the policy guideline it is mentioned must show the shareholders, the amount and value of the shares (on the date of purchase)

If you have invested by way of share capital, the business accounts must show the shareholders, the amount and value of the shares (on the date of purchase) in your name as it appears on your application. If the value of your share capital is not shown in the accounts, then a printout of the company’s register of members from Companies House must be provided. (Tier 1(Entrepreneur) Policy Guidance version 04/2017 - Page 47)

Do we need to changed the previous accounts 2014, 2015 from DL to share capital to put date of purchase? as in 2016 accounts there is no date of purchase mentioned.

If you changed DL to shares in 2016, then you bought the shares in 2016. Why would you change previous accounts ?
Ideally the date of share issue should be in the notes of the accounts, but what is more important is that the value (price) of the share is very clearly stated. Then also submit the CS01 filed when the shares were issued.

[myinfo]

Hi Marcnath

Thanks for your time to answers all the questions.
let me more clear one thing so we will get more precise answer from you.
Our accounts are from January to December. so we have submitted CS01(confirmation statement) in February 2016 but you know for accounts we have 9 months to submit so we have submitted accounts in September 2016.
The question was we have submitted CS01(confirmation statement) as director loan in feb but later we have changed our accounts and submitted as share capital in sep. Do we need to change CS01(confirmation statement)?
Hope you get get my point.

Thank you