Tier1 extn previous earning. What if pay less tax to HMRC?

[globetrotter_ks]

Hi All

My friend is applying for his Tier1 extension in May 2013. He had an income as a director of ltd company plus salary from a job. His income was £35000 in total ( £14K salary from other job and £21k limited company dividend ).
The tax liabilty for company income was £5100 but company did not do well in the later half of the financial year.
His query is what happens if he shows loss and pays less tax to HMRC than the declared tax ? Will UKBA refuse his extension ? Will he be asked questions at the airport when he enters the UK from a holiday and if he hasnt paid the tax will UKBA refuse entry? Pls clarify.

[rfd]

I am assuming that the tax year in question is the year when your friend got his initial Tier 1 Visa.

If that's the case and if income of less than 35K makes your friend ineligible for Tier 1 visa then your friend would be in trouble and his extension could be affected by this as UKBA can ask HMRC for TAX history.

Immigration staff at airport could ask him about how his income at the time of his application and the amount of TAX he has paid (in case of self employment) on it and yes if he has payed less tax than he could be in trouble.

[globetrotter_ks]

Thanks RFD for reply. Yeah tax year is when he got his initial Tier 1 visa. But it has happened with few people that they paid less than what they should be paying but inspite they got the extension. Do you think they could be in trouble during ILR ? Does UKBA always check TAX history before issuing visa extension ?

[rfd]

Hi,

I would be able to answer you more clearly if you could let me know following:

What was the min. income required for your friend's application?
if his income from business goes below 21K would he still be in the safe zone (income wise)?

On what amount has he finally paid tax on?

Thanks,

[globetrotter_ks]

Min income required for extension was £35000

No he would have been in trouble if business income fell below £21k but as now he has already received his visa on total income showed earlier ,his main worry now is about this extension .

He has already paid tax of £800 on £6000 business income.

[rfd]

Yeah will in that case he would be in trouble. Because in UKBA's eyes he has become illegible for Tier 1 G visa.

As far as I know UKBA do check the tax history of applicant but there could be odd cases where they have not. Even if UKBA skip the check at the time of extension application your friend could be prodded about it on airport (in case he goes out of country).

In case UKBA doesn't check his tax history and he gets an extension and manages to stay in country for next three years he could again be in trouble at the time ILR application as UKBA could ask for last 5 year'a TAX history.

What I would suggest is that he should declare his income properly and submit a revised tax return (his account would be able to do that) and once that is submitted either pay the full amount or ask HMRC for installments.

UKBA will not penalize him if his tax is not fully paid, all they care about is that taxes should be declared accurately. He should sort this all out before he submits his extension application.

[globetrotter_ks]

Am sure UKBA will not penalize him. But what happens if tax is declared accurately but he is genuinely not able to pay tax and instead of £5k tax he pays only £2k or £3k ? Coz he spoke to his accountant and he said tax payment can be amended but that will reduce his business income and if visa is refused he is not responsible.

[rfd]

Did your friend submitted a profit/ loss statement from his accountant with his initial application?

And as far as ukba and hmrc is concerned the tax is due on the amount he has already earned. So the argument that he is not in a position to pay will not help a great deal.

[globetrotter_ks]

Yes he did submit a profit and loss statement with his initial application which was signed by his accountant. Its like a company annual report.

[rfd]

I dont see any other options, if he wants to be on the safe side he will have to Pay the tax on amount which was declared.

Or he can find a way to convince ukba.

[brajen]

I dont see any other options, if he wants to be on the safe side he will have to Pay the tax on amount which was declared.

Or he can find a way to convince ukba.

HI rfd, Thanks for your comments. You guys are talking about income declared on the initial application.Friend of mine paid all tax on the initially declared income, then in his 2nd year, he started one more business and income went down dramatically for his 1st business. and also because he just started 2nd business with more capital went to loss making in the 1st year of 2nd business. So he did pay less tax than 1st year on his 1st business. Would this affect his extension /ILR?

[brajen]

I dont see any other options, if he wants to be on the safe side he will have to Pay the tax on amount which was declared.

Or he can find a way to convince ukba.

HI rfd, Thanks for your comments. You guys are talking about income declared on the initial application.Friend of mine paid all tax on the initially declared income, then in his 2nd year, he started one more business and income went down dramatically for his 1st business. and also because he just started 2nd business with more capital went to loss making in the 1st year of 2nd business. So he did pay less tax than 1st year on his 1st business. Would this affect his extension /ILR?[/

[max2k12]

as long as the full tax is been paid on the income he claimed before and can mee the income requirement in second extension .

ukba has not issue.

[rfd]

sorry i am confused now, are you saying that for year 2010 your firnd has paid tax on 21k income?

If that's the case than it doesn't matter what he has done in the following year(s), he could have be zero income. UKBA will not check his both year's tax returns they would only be concerned about the year's when he had made his applications (initial/ Ext).

Hope this helps

[Mayurc]

Let me shed some light on this hot topic.

I recently extended my visa based on Self employment. The information I provided them was more than enough to judge my case in two hours.

My First visa was also produced based on Empl + Self Employ. I declared the income and paid the relevant taxes. Second Year my income went down because of some family visits during the year. Still I submitted my return and paid due tax. In third year i again started contracting and submitted return and will pay my balance tax by 31 Jan 13

If you can provide below documents to UKBA, you may receive same day as I got:

Self-Employed People Only

1. Sales Invoices for 12 Months
2. Original UTR confirmation letter by HMRC
3. Last 3 years Class 2 NI Invoices and payments
4. Last 3 years Self assessment returns -HMRC letterhead
5. Last 3 years INCOME TAX payment summary on HMRC letterhead - You need to call HMRC just 30 days before your application. They took 15 days to send me.
6. Accountant's Letter confirming Net Profit
7. Income summary highlighting sales inv no, doi, invamt, bank reciptdate
(my accountant manually ticked on this paper with 3 way matching 1.Sales Invoice Amount2.Bank Receipt 3.On income summary letter) Then he stamped the letter and signed) This was not on letterhead.
8. Profit & Loss
9. Balance Sheet

My case was represented by solicitor and to be honest I provided all paper documents in order so CASEWORKER do not get confused and can understand my case easily. I made CW life easy providing information for last 3 years instead 1 year officially. So he/she can understand that I was economically active in last 3 years. Within 1.5 hours without any single questions, I granted FLR for 2 years. I shared these before and again sharing so you can benefit what is happening and how you prepare.CW did not call my any customers but she called to my Accountant and Asked Do you know Mr....? Thats it.

Happy Days!

[rfd]

Same here for my initial application I was self emp + emp. For my ext i was only emp.

I went to PEO for my ext the only question case worker asked me there was if I am employed or self employed.

I got my visa after two hours.

One more thing to add I switched jobs after my initial T1 G visa, with my new job i didn't had enough time to do much self emp work. So for last two years my income from business in nominal.