Credit sales: Tier 1 entrepreneur extension

[divchopra]

Hello,

I have an extension application soon. My business was severely affected by covid. I was already a startup when i started and couldn't go ahead except one or two small orders here and there. After lot of hardwork I managed to get one big order with a good client but it was all on credit. The term of delivery and payment is after 9 months. Its one order which will take me few months to even manufacturer (fashion apparels). Now my visa application is here and I haven't fulfilled the delivery yet or received the payment. It should be done by end of march. But my visa application is next week. My question basically is how would ukba react to this? Since i have sales but it doesn't reflect in my bank account. How do i prove its a genuine transaction? Im worried if they say there is turnover but no cash in bank. Can anyone advice with this? Please..

[marcnath]

Hello,

I have an extension application soon. My business was severely affected by covid. I was already a startup when i started and couldn't go ahead except one or two small orders here and there. After lot of hardwork I managed to get one big order with a good client but it was all on credit. The term of delivery and payment is after 9 months. Its one order which will take me few months to even manufacturer (fashion apparels). Now my visa application is here and I haven't fulfilled the delivery yet or received the payment. It should be done by end of march. But my visa application is next week. My question basically is how would ukba react to this? Since i have sales but it doesn't reflect in my bank account. How do i prove its a genuine transaction? Im worried if they say there is turnover but no cash in bank. Can anyone advice with this? Please..

Turnover or sales is not a criteria for your extension. So I am not sure why this is a concern.
Also, HO does not have access to your bank account, so how would you expect them to even make this connection?

[divchopra]

Hi Marcnath. Thank you for you reply! I know its not a part of point based system. My investments, payroll are clear and easy but they also judge whether the business is genuine or not right. I have seen one application from 2016 on this forum who had a similar problem amongst few other problems and his visa was rejected on the basis that bank account didn't reflect turnover. I got in touch with this company and after much negotiation they gave me the order. But the orders are for a future date before they want to start their marketing for the said product. My annual account has a good number of sales. The amount on the bill was £27700. But the delivery is in march and payment once quality and delivery is passed. Its a very reputed company so im not worried about the payment! Now before my visa I don't want them to think the sales was not genuine. Can they reject an application based on that? (Like i said my investments, payroll, maintenance balance are clear).

[Mehfuzpatel]

Any order cannot be considered sale unless it has been despatched, this is my view not sure what Mods think about this.. that is why it is called purchase order I guess.

How would it show on accounts unless You have despatched and made invoice? You have to have invoice made for it to show on accounts

Any correction from Marcnath will be much appreciated. Thanks @Marcnath

[marcnath]

Hi Marcnath. Thank you for you reply! I know its not a part of point based system. My investments, payroll are clear and easy but they also judge whether the business is genuine or not right. I have seen one application from 2016 on this forum who had a similar problem amongst few other problems and his visa was rejected on the basis that bank account didn't reflect turnover. I got in touch with this company and after much negotiation they gave me the order. But the orders are for a future date before they want to start their marketing for the said product. My annual account has a good number of sales. The amount on the bill was £27700. But the delivery is in march and payment once quality and delivery is passed. Its a very reputed company so im not worried about the payment! Now before my visa I don't want them to think the sales was not genuine. Can they reject an application based on that? (Like i said my investments, payroll, maintenance balance are clear).

Yes, the genuineness test is a bit of a messy one. But from most cases in this forum, I have noticed it is not just one thing that seems to trigger that - it is a combination of factors. For example, if you have two employees for exactly 12 months on minimum wage, it would raise questions for me too.
I still believe that if your business is genuine, you don't have much to worry about.
Having said that, @mehfuzpatel has a point. If you have only received an order and you will start working on it only after a few months, I can't see how that will show up in your books - have you sent the customer an invoice? Check with your accountant on how this has to be accounted for. As per standard accounting practice, you should not be recognising that sale until it has been delivered.

[divchopra]

Hi..
My Payroll have been running for 14-15 months and still running. Before that it was covid so ai couldn't really afford to have an employee! I hope they don't expect us to have employees from day 1 especially at the time of covid and cost of living crisis. That would be really foolish for my company. To tell you the truth, I only needed one employee until I reach a point of target sales but I had to get two because of visa formalities. But I should clarify the sale with my accountant. It's a big order so process of making it takes time and I can only deliver once it is finished. Having said that I have supplied them a small order (part of same order) for quality checks and overall benchmark for the designs we made. Can I ask what exactly triggers them to think the business isn't genuine? And how much of a factor it is of what they think in the success of your application especially when you have all points from payroll to investments covered) (PS: my business plan was selected in tier1 GE by my uni and then i continued with it in tier1 ent., Established the business and covid happened. I have invested a big sum in the business but unfortunately the returns aren't flowing yet for various reasons). I'm just worried a bit after reading some answers on forum.

[marcnath]

Hi..
My Payroll have been running for 14-15 months and still running. Before that it was covid so ai couldn't really afford to have an employee! I hope they don't expect us to have employees from day 1 especially at the time of covid and cost of living crisis. That would be really foolish for my company. To tell you the truth, I only needed one employee until I reach a point of target sales but I had to get two because of visa formalities. But I should clarify the sale with my accountant. It's a big order so process of making it takes time and I can only deliver once it is finished. Having said that I have supplied them a small order (part of same order) for quality checks and overall benchmark for the designs we made. Can I ask what exactly triggers them to think the business isn't genuine? And how much of a factor it is of what they think in the success of your application especially when you have all points from payroll to investments covered) (PS: my business plan was selected in tier1 GE by my uni and then i continued with it in tier1 ent., Established the business and covid happened. I have invested a big sum in the business but unfortunately the returns aren't flowing yet for various reasons). I'm just worried a bit after reading some answers on forum.

There is no clear indication about what triggers the genuineness criteria. As I mentioned, if you are running a genuine business (and it sounds like you are), you should be able to explain that. You can check through this forum but if I recall correctly, entrepreneurs that failed the genuineness test almost always had an interview. so there is an opportunity for you to demonstrate it is genuine.

[divchopra]

Thank you Marcnath. I hope if they feel something is off, they hear me out and I can hopefully explain them. Can I also ask how much of a problem a failed business is? I mean I wouldn't call my business a failed business as its still running. But since I started about covid time there haven't been returns, in fact huge losses. (I know if I have two good years, I can cover the losses). But how does ukba react to that? Do they want numbers in your business. Can they reject you in the basis that u had no sales? I'm in a dilemma of running a business that's in trouble but with time it will only grow and to explain a completely different authority i.e. ukba that they should trust my plan and business and even if I look like a doomed business now, we can pull it off. Is there any cases in your experience where this was a problem for the HO?

[marcnath]

Thank you Marcnath. I hope if they feel something is off, they hear me out and I can hopefully explain them. Can I also ask how much of a problem a failed business is? I mean I wouldn't call my business a failed business as its still running. But since I started about covid time there haven't been returns, in fact huge losses. (I know if I have two good years, I can cover the losses). But how does ukba react to that? Do they want numbers in your business. Can they reject you in the basis that u had no sales? I'm in a dilemma of running a business that's in trouble but with time it will only grow and to explain a completely different authority i.e. ukba that they should trust my plan and business and even if I look like a doomed business now, we can pull it off. Is there any cases in your experience where this was a problem for the HO?

I haven't seen any rejection based on whether a business succeeds or fails. In fact, I even recall some reference in the guidance that HO understands businesses can fail. There is no requirement that the business is even existing at the time of extension/ILR

[divchopra]

Right! Thanks Marcnath. That's a good news. And its good they understand that sime business can be having loss for few years and gradually achieve better results. Although I find it weird when you said business don't need to exist. The whole point of this visa is to give it to people with continued business in the UK right. Why would they even consider an application when business in not existing! That's opposite to what the visa stands for isn't it?

[marcnath]

Right! Thanks Marcnath. That's a good news. And its good they understand that sime business can be having loss for few years and gradually achieve better results. Although I find it weird when you said business don't need to exist. The whole point of this visa is to give it to people with continued business in the UK right. Why would they even consider an application when business in not existing! That's opposite to what the visa stands for isn't it?

It is an absolute requirement that the applicant remains an entrepreneur. But he/she could have moved on to another business. That can happen over the 3/5 year timeframe

[msx273]

Hi Div,

It is clearly evident that if turnover does not reflect on back account it looks suspicious, how ever what I strongly recommend you is add any important information on covering letter if necessary, mods in this group are high knowledge and hope it will help you with lots of necessary information.

As long as your business is genuine, dont worry about the odds,

Could you send me the link of the 2016 post which was refused on the basis of turn over

All the best for your visa application

Hi Marcnath. Thank you for you reply! I know its not a part of point based system. My investments, payroll are clear and easy but they also judge whether the business is genuine or not right. I have seen one application from 2016 on this forum who had a similar problem amongst few other problems and his visa was rejected on the basis that bank account didn't reflect turnover. I got in touch with this company and after much negotiation they gave me the order. But the orders are for a future date before they want to start their marketing for the said product. My annual account has a good number of sales. The amount on the bill was £27700. But the delivery is in march and payment once quality and delivery is passed. Its a very reputed company so im not worried about the payment! Now before my visa I don't want them to think the sales was not genuine. Can they reject an application based on that? (Like i said my investments, payroll, maintenance balance are clear).

[divchopra]

Right! Thanks Marcnath. That's a good news. And its good they understand that sime business can be having loss for few years and gradually achieve better results. Although I find it weird when you said business don't need to exist. The whole point of this visa is to give it to people with continued business in the UK right. Why would they even consider an application when business in not existing! That's opposite to what the visa stands for isn't it?

It is an absolute requirement that the applicant remains an entrepreneur. But he/she could have moved on to another business. That can happen over the 3/5 year timeframe

Hi Marcnath,

My brp last date was on 17th. I had about ,£2000 of investment left to be done. (Calculation issue). I made the same on 17th but in evening. Now the bank statement shows the transactions date on 20th as 17th was Friday n it was made after 6:30 pm so date shown is next working day (20th,) as per Natwest. Does it impact the application? How do i explain ukvi that i transferred all investment before my last date on brp. My biometric is in two weeks.

[marcnath]

Right! Thanks Marcnath. That's a good news. And its good they understand that sime business can be having loss for few years and gradually achieve better results. Although I find it weird when you said business don't need to exist. The whole point of this visa is to give it to people with continued business in the UK right. Why would they even consider an application when business in not existing! That's opposite to what the visa stands for isn't it?

It is an absolute requirement that the applicant remains an entrepreneur. But he/she could have moved on to another business. That can happen over the 3/5 year timeframe

Hi Marcnath,

My brp last date was on 17th. I had about ,£2000 of investment left to be done. (Calculation issue). I made the same on 17th but in evening. Now the bank statement shows the transactions date on 20th as 17th was Friday n it was made after 6:30 pm so date shown is next working day (20th,) as per Natwest. Does it impact the application? How do i explain ukvi that i transferred all investment before my last date on brp. My biometric is in two weeks.

I don't see an issue. They may ask questions but you seem to have a reasonable reason.

[divchopra]

But the statement that goes with the file will show 20th. How do I prove that they were made on 17th? (Before my last day on brp) The only document i can give is bank statement which won't reflect this fact. What are the Ho rules about this? Will i be short of £50k then? I'm nervous. Made a stupid mistake!

[divchopra]

(Edited from above)

But the statement that goes with the file will show 20th. How do I prove that they were made on 17th? (Before my last day on brp) The only document i can give is bank statement which won't reflect this fact. What are the Ho rules about this? Will i be short of £50k then? What if they don't ask anything and reject the application just based on the fact my bank statement shows £2000 less till 17th (my last day of brp) (Of course I will provide unaudited accounts but again im confused about the date on audited accounts too cuz if i make till 17th, the CA on basis on statements will think the last entry was on 20th) What exactly should I do now? Please help.

[marcnath]

(Edited from above)

But the statement that goes with the file will show 20th. How do I prove that they were made on 17th? (Before my last day on brp) The only document i can give is bank statement which won't reflect this fact. What are the Ho rules about this? Will i be short of £50k then? What if they don't ask anything and reject the application just based on the fact my bank statement shows £2000 less till 17th (my last day of brp) (Of course I will provide unaudited accounts but again im confused about the date on audited accounts too cuz if i make till 17th, the CA on basis on statements will think the last entry was on 20th) What exactly should I do now? Please help.

What makes you think the 17th is a critical date?

Under Section 3C rules, your initial grant has been extended on the same conditions until a decision has been made on your application. 20th is still well within your initial grant of leave.

[divchopra]

Hi Marcnath.

I had a chat with you long time back about investment and you told me it had to be made till last date of your extension. So I was under impression that my last date is 17th based on my BRP. And 20th goes outside that period which basically means any investment after 17th would fall out of range and not considered. I thought section 3c gives me an opportunity to remain in the UK on same conditions but can't be used to prove investments or any documents dated post 17th February i.e. my last date for initial grant of leave. Do I need to give any explanation to HO or just send the transactions as it is?

[marcnath]

Hi Marcnath.

I had a chat with you long time back about investment and you told me it had to be made till last date of your extension. So I was under impression that my last date is 17th based on my BRP. And 20th goes outside that period which basically means any investment after 17th would fall out of range and not considered. I thought section 3c gives me an opportunity to remain in the UK on same conditions but can't be used to prove investments or any documents dated post 17th February i.e. my last date for initial grant of leave. Do I need to give any explanation to HO or just send the transactions as it is?

I do not exactly remember that but I can't find anything now that puts a cut off date for investment. But I do recall cases where additional employment during the extension processing time has been accepted to meet the job requirements.

You are not required to submit exact dates of investment with your application. Anyway, it takes quite some additional work for HO to figure out that information. And I don't see why they would do that unless they have other reasons to dig further in.

[divchopra]

Perfect thank you Marcnath! Also do i necessarily need to send business bank statements for investment entries? Or only unaudited accounts with compilation report and directors loan agreement is okay? (Without sending business bank statements since my application is after 19th November 2021).

Also confused about the maintenance balance document. I have downloaded online statements from bank for that. Do i need to get a letter additionally too or are online statements enough?

[marcnath]

Perfect thank you Marcnath! Also do i necessarily need to send business bank statements for investment entries? Or only unaudited accounts with compilation report and directors loan agreement is okay? (Without sending business bank statements since my application is after 19th November 2021).

Also confused about the maintenance balance document. I have downloaded online statements from bank for that. Do i need to get a letter additionally too or are online statements enough?

Yes, you do not need to send in the bank statements.
The maintenance fund evidence requirement is quite clear:

If you wish to submit electronic bank statements these must contain all of the details listed
above. In addition, you will need to provide either:
• a supporting letter from your bank, on the bank’s headed paper, confirming the
authenticity of the statements; or
• an electronic bank statement bearing the official stamp of the bank in question will be
accepted. This stamp should appear on every page of the statement.


So, yes, you need to get the letter or have the bank stamp each sheet.

[divchopra]

Thanks Marcnath.

Just two follow up question. The latest case worker (home office staff) guide updated on 6th October stil says that business bank accounts need to be sent along with other proofs for investment after may '15. (Doesn't mention anything about application s after 19th Nov 2015) ....while the latest tier 1 guidance says Business bank statements are needed if application is after 19th Nov 2021. (Basically says now its not needed for application in 2023). But which one should we follow? Case worker or tier 1 guidance. And why is there discrepancy between the two?

Second question about maintenance balance is: i filed my application on 17th February. My biometric date is 14th march. For maintainence bank statements have to be within 31 days before the date of application. Will my of application be considered 17th Feb or 14th march? If its 17th i will give my statements from October 1 to Feb 1. (Bank statements dates every month so last is Jan-feb) but if its 14th march the date will be till at least 14th February right.

[marcnath]

Thanks Marcnath.

Just two follow up question. The latest case worker (home office staff) guide updated on 6th October stil says that business bank accounts need to be sent along with other proofs for investment after may '15. (Doesn't mention anything about application s after 19th Nov 2015) ....while the latest tier 1 guidance says Business bank statements are needed if application is after 19th Nov 2021. (Basically says now its not needed for application in 2023). But which one should we follow? Case worker or tier 1 guidance. And why is there discrepancy between the two?

Second question about maintenance balance is: i filed my application on 17th February. My biometric date is 14th march. For maintainence bank statements have to be within 31 days before the date of application. Will my of application be considered 17th Feb or 14th march? If its 17th i will give my statements from October 1 to Feb 1. (Bank statements dates every month so last is Jan-feb) but if its 14th march the date will be till at least 14th February right.

You need to follow the guidance.

Having said that, I just looked at the case worker guidance of 6th October 2021 and it says:

Director’s loan
If the applicant has made the investment in the form of a director’s loan, it must be
shown in the relevant set of financial accounts provided. Investments made on or
after 19 November 2015 must also be shown through readily identifiable transactions
in the applicant’s business bank statements, which must clearly show the transfer of
this money from the applicant to the business. They must also provide a legal
agreement, between them (in the name that appears on their application) and the
company

For the second question, your date of application is the date you made the online submission, not the biometrics date

[divchopra]

Marcnath!

Exactly! The case worker guidance says it must be shown in business bank accounts too. While the guidance doesn't. The HO staff will basically use case worker guidance isn't it? And refuse application if documents are missing according to their guidance. I don't understand why are they both different just to cause more confusion. The reason why Im thinking not to send any business bank statements is to avoid the date issue altogether. But now its a dilemma to choose between both guidance.

[marcnath]

Marcnath!

Exactly! The case worker guidance says it must be shown in business bank accounts too. While the guidance doesn't. The HO staff will basically use case worker guidance isn't it? And refuse application if documents are missing according to their guidance. I don't understand why are they both different just to cause more confusion. The reason why Im thinking not to send any business bank statements is to avoid the date issue altogether. But now its a dilemma to choose between both guidance.

You can stick to the applicant's guidance. The case worker guidance is not for applicants.

Even if they refuse your application (unikely), it would be a mistake so you would be successful on AR. And they have an obligation to ask you for the statements first as it would be additional information.