NET PROFIT CALCULATION FOR SOLE TRADERS(AFTER 1 APRIL 2012)

rpsarangi · Post by **rpsarangi** » Sat Sep 22, 2012 12:41 am

@sushdmehta
Thanks for the reply..
I have an PEO Croydon..
Is it not that the case worker will ask in case he is in doubt about any documents???

Post by **geriatrix** » Sat Sep 22, 2012 12:46 am

Do you score the necessary points for income in both scenarios (before tax vs. after tax)?

rpsarangi · Post by **rpsarangi** » Sat Sep 22, 2012 12:48 am

Yes I do .. In both the cases i score the required points..
I score the required points with the net Income ( after tax and expenditure ) and more 5 points if the CW considers the Net income before tax..

Post by **geriatrix** » Sat Sep 22, 2012 12:52 am

Then no harm in including letter in both formats. You can tell him/her that you were uncertain so had the accountant prepare two separate letters and that he/she may use the one he/she believes is the right one.

rpsarangi · Post by **rpsarangi** » Sat Sep 22, 2012 1:00 am

@sushdmehta
No I am not making two letters in 2 formats .. what i meant is that
For e.g in income certificate the accountant will say
gross income , expenditure the net ( after expenditure) and also the net Income ( after tax and expenditure)
similiary in invoice explanation letter and the profit and loss statement..
what i meant is that he will add another figure telling that is the net income ( after expenditure) and also the net ( after tax and expenditure)

I will claim point based on the net ( after tax and expenditure) but all the letter will have both and if CW wants the net ( after Expenditure) can consider that and award more points..

rpsarangi · Post by **rpsarangi** » Sat Sep 22, 2012 1:15 am

For Eg In come certificate :
The ACCOUNTANT WILL SAY :
HE IS CONFIRMING THE GROSS SALES IS ****, EXPENDITURE IS **** AND THE NET TAXABLE INCOME ( in bracket AFTER EXPENDITURE) is ***** and the NET INCOME FROM BUSINESS ( in bracket AFTER TAX AND EXPENDITURE) is ****

so the income certificate will have NET TAXABLE INCOME AND THE NET INCOME AFTER TAX and the CW can pick what ever he wants

similarly all other letters..

please comment.

Post by **geriatrix** » Sat Sep 22, 2012 1:21 am

I am not the appropriate person to answer the query but here's my take.

The document must certify the gross revenue, expenditures, tax, profit / income before tax, profit / income after tax. Between the latter two, let the CW decide whichever is accurate representation of your "earned income" in line with the UKBA policy.

rpsarangi · Post by **rpsarangi** » Sat Sep 22, 2012 1:27 am

Yes thats exactly what i am trying to do ..I am trying to put the figures clearly telling what they the NET TAXABLE INCOME AND THE NET INCOME AFTER TAX and let the case worker to choose which figure he wants ..

but claim point for income basing on the NET INCOME( AFTER TAX AND EXPENDITURE) and in case the case worker think that he should award points basing on the NET TAXABLE PROFIT he will see that in the letter and can use that to award point.

i hope that it is ok..???

Post by **geriatrix** » Sat Sep 22, 2012 1:29 am

I believe so.

rpsarangi · Post by **rpsarangi** » Sat Sep 22, 2012 1:31 am

THANKS SUSHDMEHTA..
THANKS FOR CLARIFYING MY DOUBT...
THANKS AGAIN...I REMEMBER YOUR HELP DURING MY INITIAL APPLICATION AS WELL IN 2010..
THANKS AGAIN.....

shahmir · Post by **shahmir** » Sat Sep 22, 2012 3:35 am

@rpsarangi

Please do return here after your extension!!!
and tell us a final equation.

Because you meet income requirements in both cases, so you are safe. I feel you are the best person to discuss this issue with CW once your decision is made.

Reference
Paragraph 92 and 93 of Tier 1 Guidance
Paragraph 25(a) of Appendix A of Immigration Rules

We will certainly benefit from the information you'll bring here. cheers

alifaroo · Post by **alifaroo** » Sun Sep 23, 2012 10:59 pm

Posted: Sun Sep 23, 2012 8:42 pm Post subject: Re: Tier 1 General Extension - Job + Self employment

--------------------------------------------------------------------------------

anu10 wrote:
Hi members,

My Tier 1 extension is due in September. My earnings are made up from both full time employment salary + self employment income. I am looking for your guidance/clarifications in few issues.

1. How my self employment income is calculated (Gross or Net)
2. If Net, should Tax be subtracted?
3. What is the current savings threshold for Main applicant + dependant
4. Can I use same day service at Glasgow PEO?

Thanks in advance.

Anu

Guys,

I just had my and my wife's Tier 1 (general) extended and this is my experience.
First of all thanks all for your comments and sharing your experience in this forum. But I have to say that I lost my confidence little bit on this forum trying to find out answer for above 1 & 2 questions. The answers I got really divided. Fortunately I had a friend who was in the same situation and I followed his instructions and it proved to be correct.

So for the self employment it is net earnings;
Net earnings = Gross Income- Expenses.

I had following documents
Accountant letter/Invoice summary and Income and expenditure accounts/welcome letter from hmrc.

I wanted to do it in person. However I could not get an appointment through lottery like on-line appointment system (every time I tried it was technical fault or no appointments). But managed to get an appointment at
Sheffield PEO through a solicitor at last minute( expensive). I emailed him the electronically filled apps and covering letter.

On the day; I went there (with my wife), met the solicitor and completed the agent/solicitor section in our applications (around 10 am). He also briefly checked the documents. Then the applications were handed over by the solicitor (10.30 am). Then...payment was taken(11 am), biometrics was given (1 pm). Then we went out for lunch and came back around 2 pm. Waited around 2 hours only to find out our passports and approval letters were lying behind the counter (phew). No interviews or anything. Happy ending....
**********************
**********************

Hi All,

I am going to post my tier 1 g extension application tomorrow - for time being I got confused and a bit worried becuase of Net earnings discussed in this topic ?!!!

I always been in imperession;

Net Earnings=Gross Income-Expenses > as according to Appendix A of immigration rules 24 and 25 (a).......

Paragraph 92 clearly say income before tax;
What I understand from paragraph 93 of policy guidance notes is the condition when more than one person are running a business in partnership and earns from that business under self-employment - he/she will claim earnings only from net profit of that business of which he/she is entitled to;

lets say;

Business A has two partners a and b;
suppose net profits of that business are;
£10,000/- (now this Net Profit is = Gross Earnings - Expenses - Tax)
'a' is entitled to £5,000/-
and 'b' is entitled to £5,000/-
Now if 'a' wants to retain the profits - he/she will be able to claim part earnings what he/she is enttitled to which is £5000/- and this is =Gross Earnings - Expenses - Tax,
Hope this clears the confusion.

Reply from anu10 clear it all

Regards
Farhan

rpsarangi · Post by **rpsarangi** » Sun Sep 23, 2012 11:10 pm

good luck alifaroo
where is your PEO?
and please dont forget to come back and post your experiences ..
good luck.

alifaroo · Post by **alifaroo** » Sun Sep 23, 2012 11:13 pm

rpsarangi wrote:good luck alifaroo
where is your PEO?
and please dont forget to come back and post your experiences ..
good luck.

Thanks rpsarangi,
I will posting my application to Sheffield.

silverline · Post by **silverline** » Sun Sep 23, 2012 11:21 pm

Hi Guys

I've tried to clarify this confusion earlier but I see some valid concerns by applicants due to unclear policy guidance.

Para 25 doesn't need further clarification.

Real issue is para 92/93 which I see is with reference to case where busines is a seperate legal entity e.g ltd company- where company pays business taxes i.e. VAT, Corporate tax. In that case, earnings after business taxes should be considered as qualified earnings e.g. Gross dividends.

Another way of analysing this issue is that If employed applicants can claim points before tax i.e. gross employment income then how come self-employed applicants can be disadvantaged and asked to claim point on profits after tax? NET PROFIT BEFORE TAX of a self-employed is as good as GROSS EMPLOYMENT INCOME of an employee. The only difference is that in case of self-employment, responsibility of tax/NI payment is on self-employed. And in-case of employment, tax/ni is a responsibility of employer. That's the very reason why CW are normally concerned and ensure that self-employed has paid tax/ni.

I hope it helps. Please be advised that's just my opinion.

With best wishes & regards

prabu11 · Post by **prabu11** » Mon Sep 24, 2012 1:23 pm

rpsarangi wrote:Yes thats exactly what i am trying to do ..I am trying to put the figures clearly telling what they the NET TAXABLE INCOME AND THE NET INCOME AFTER TAX and let the case worker to choose which figure he wants ..

but claim point for income basing on the NET INCOME( AFTER TAX AND EXPENDITURE) and in case the case worker think that he should award points basing on the NET TAXABLE PROFIT he will see that in the letter and can use that to award point.

i hope that it is ok..???

I think you are overdoing it and trying to confuse the CW.

After reading the comments in this post, I did speak to one my friend who applied for Tier 1 extension a week before who had employed as well as self-employed earnings. He did not know any of these problems (para 92 or 93), but went ahead with the application almost as identical as his initial Tier 1 application (i.e. Net Profit = Gross Profit - Expenses).

For clarity sake, the details are:
Employed: £43000 Self-Employed = £9100 (10200 - 1100)
Total earnings = £43000 + £9100= £52100

He applied at Croydon PEO and got the extension without any issues.

I hope this helps.

ogre2012 · Post by **ogre2012** » Tue Sep 25, 2012 1:19 am

prabu11 wrote:
rpsarangi wrote:Yes thats exactly what i am trying to do ..I am trying to put the figures clearly telling what they the NET TAXABLE INCOME AND THE NET INCOME AFTER TAX and let the case worker to choose which figure he wants ..

but claim point for income basing on the NET INCOME( AFTER TAX AND EXPENDITURE) and in case the case worker think that he should award points basing on the NET TAXABLE PROFIT he will see that in the letter and can use that to award point.

i hope that it is ok..???
I think you are overdoing it and trying to confuse the CW.

After reading the comments in this post, I did speak to one my friend who applied for Tier 1 extension a week before who had employed as well as self-employed earnings. He did not know any of these problems (para 92 or 93), but went ahead with the application almost as identical as his initial Tier 1 application (i.e. Net Profit = Gross Profit - Expenses).

For clarity sake, the details are:
Employed: £43000 Self-Employed = £9100 (10200 - 1100)
Total earnings = £43000 + £9100= £52100

He applied at Croydon PEO and got the extension without any issues.

I hope this helps.

Hi ,

This is my first post here, hope am not going against any of the forum rules. Pls can some one point me to an accountant who has helped in preparing self employed accounts for ILR purpose. At least someone that is familiar with HO criteria. Am in milton keynes , Buckinghamshire.
Thanks a lot.

rpsarangi · Post by **rpsarangi** » Tue Sep 25, 2012 2:31 am

@prabhu
Thanks for the reply.. when your friend applied?

prabu11 · Post by **prabu11** » Tue Sep 25, 2012 9:19 am

Hi, It was on 13th

marynwokedi · Post by **marynwokedi** » Tue Sep 25, 2012 4:04 pm

I will be applying for an Extension in Nov 2012. When i applied for my Tier 1 visa, i used self employed net profit before Tax and application was approved but i guess rules must have changed since then.

I think i will be using my Self employed net profit after tax but the problem is that since i am claiming for periods April 2011 - Oct 2011 (pre-maternity period) and June 2012 - Nov 2012 ( post maternity period), Tax will not be due for the financial year 2012/2013 until Jan 2014. I already paid tax for earnings in April 2011-Oct 2011 so i was wondering if i should just calculate 20% off for Tax manually on earnings in June 2012 - Nov 2012? It makes no sense and seems unproffessional.

has anyone submitted application declaring Net after Tax? How did you get the Tax amount for the period?

rpsarangi · Post by **rpsarangi** » Wed Sep 26, 2012 9:27 am

Marynwokedi
I am going to follow a similar procedure and my extension is before in October , I have filed and paid tax for year 2011-12 and my claim period is not the tax year but my accountant calculated tax and class 4 NI on the net amount after expenditure and gave a net figure after tax to be considered by HO. He have mentioned both my net before tax and net after tax ..

Hope that helps

prabu11 · Post by **prabu11** » Wed Sep 26, 2012 10:01 am

Did any one of you write to UK BA and seek a clarification on this?

alifaroo · Post by **alifaroo** » Wed Sep 26, 2012 1:46 pm

prabu11 wrote:Did any one of you write to UK BA and seek a clarification on this?

I think if you guys read the appendix A immigration rules and guidance notes carefully you will get the answer - it is simply you net income=gross-expenses

rpsarangi · Post by **rpsarangi** » Wed Sep 26, 2012 10:17 pm

Alifaroo
How did our PEO go??

marynwokedi · Post by **marynwokedi** » Thu Sep 27, 2012 5:31 pm

@rpsarangi
Thank you. I will file both profit before and after tax

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