ILR - Self employed - Earnings evidence

[KayNa]

Hi, I'm wondering if anyone has knowledge or experience of applying as a sole trader (not working within a company structure) providing evidence for earnings.

I am a sports instructor and currently have almost 150 clients paying various amounts for enrolments throughout the year, a total of around 300 payments over 12 months.
I send them emails stating the amount due and a follow up email confirming receipt of payment.

All of these correspondences are backed up by online transfers to my personal bank account.
I'm getting my accountant to write a letter also confirming my net profit, and I'm aware that I need to also provide 'invoices' along with my application as further evidence.

MY QUESTIONS
1. Can I print these emails and use them as invoices and evidence for payments?

2. If not, what constitutes as an "invoice" in UKBA's opinion?

3. Is there anything else besides accountant's letter, official bank statements and invoices (emails) that I need to provide which I've missed from the guidance notes?

Thanks for your help.

[Kevin24]

Hi, I'm wondering if anyone has knowledge or experience of applying as a sole trader (not working within a company structure) providing evidence for earnings.

I am a sports instructor and currently have almost 150 clients paying various amounts for enrolments throughout the year, a total of around 300 payments over 12 months.
I send them emails stating the amount due and a follow up email confirming receipt of payment.

All of these correspondences are backed up by online transfers to my personal bank account.
I'm getting my accountant to write a letter also confirming my net profit, and I'm aware that I need to also provide 'invoices' along with my application as further evidence.

MY QUESTIONS
1. Can I print these emails and use them as invoices and evidence for payments?

2. If not, what constitutes as an "invoice" in UKBA's opinion?

3. Is there anything else besides accountant's letter, official bank statements and invoices (emails) that I need to provide which I've missed from the guidance notes?

Thanks for your help.

If you raise an Invoice you need to Pay VAT. Do you charge VAT on your E-mails?

[Casa]

Assuming you're not VAT registered, an invoice must show the following to meet HMRC requirements:
an invoice number which is unique and follows on from the number of the previous invoice
the seller's name or trading name, and address
the invoice date
the time of supply (also known as tax point) if this is different from the invoice date
the customer's name or trading name, and address
a description sufficient to identify the goods or services supplied to the customer

You haven't mentioned a copy of your last year's Self Assessment Tax Return. You'll need to submit that with your application.

Kevin24 ...in the UK you only need to register for VAT if your VAT taxable turnover for the previous 12 months is more than £79,000. For anything below this, registration is voluntary.

[Kevin24]

Assuming you're not VAT registered, an invoice must show the following to meet HMRC requirements:
an invoice number which is unique and follows on from the number of the previous invoice
the seller's name or trading name, and address
the invoice date
the time of supply (also known as tax point) if this is different from the invoice date
the customer's name or trading name, and address
a description sufficient to identify the goods or services supplied to the customer

You haven't mentioned a copy of your last year's Self Assessment Tax Return. You'll need to submit that with your application.

Kevin24 ...in the UK you only need to register for VAT if your VAT taxable turnover for the previous 12 months is more than £79,000. For anything below this, registration is voluntary.

Thank You Casa for your valuable Input.

[Casa]

I had to check the threshold

[fomsand1]

You're right Casa

@KayNa, you haven't mentioned anything about your situation, eg. Current immigration status and when this runs out ie when you're eligible for ILR. This will enable experts on the forum provide the right advice. Please provide these bits of info.
Thanks

[Casa]

According to previous posts...Tier 1 General...applying for ILR.

[Kevin24]

I had to check the threshold

Threshold from 01/04/2012 is £77,000.

[fomsand1]

Lol! Kevin24 always the fountain of information. I'm going for my appointment in 2 weeks time, 15th. Fingers crossed

[KayNa]

Thanks for all the replies so far.

I'm Tier 1 General, valid until 19 April 2013, have a PEO booked for 16 April.

I found the list of HMRC invoice requirements on their website under "VAT invoices", however further down it says:

When a VAT invoice must not be issued
You must not issue a VAT invoice in the following situations:
- you are not registered for VAT
http://www.hmrc.gov.uk/vat/managing/cha ... voices.htm

I'm not registered for VAT therefore shouldn't be issuing such invoices. I've looked on their guidelines for Self Employed Record Keeping and it states:

Records you must keep
Your business records must include:
- a record of all your sales and takings
- a record of all your purchases and expenses

Records you may need
All businesses are different and there are many types of detailed records that you may need to keep. Here are some examples:
- cashbooks
- invoices and receipts
- electronic sales records or till rolls
http://www.hmrc.gov.uk/sa/rec-keep-self-emp.htm

However I can't find anything on their website or on these forums as to the requirements of "invoices".

My accountant said correspondence through email following trail of initial quote of payments due, through to confirmation of receipt of payment, will be sufficient for them to provide a letter confirming my net profit, but they're experience is providing earnings confirmation for Tier 1 applications, so I'm not sure if they have different requirements?

Casa: when you quoted requirements for invoices was that from experience as to what PEO Agents require?

Does anyone else have experience as to what UKBA will require when it comes to "invoices"?

Thanks again for your help.

[Kevin24]

Lol! Kevin24 always the fountain of information. I'm going for my appointment in 2 weeks time, 15th. Fingers crossed

Don't worry Mate! You will be fine. You could take the CW for dinner after you get your ILR

[KayNa]

You haven't mentioned a copy of your last year's Self Assessment Tax Return. You'll need to submit that with your application.

I hadn't seen reference to this in the guidelines - do you mean Self Assessment for 2011-2012?
I have this so it's no problem. I thought I just needed NIC payments to prove self employment?

Could you let me know where it says I need to provide this as I might be reading wrong guidelines! Or just going mad with pre-application anxiety...

[fomsand1]

Hi KayNa,

I've read success stories on this forum where applicants using self employed earnings to claim points present letters from their clients as a substitute for invoices. You may need to explore this option further.

Kevin/Casa, can you shed more light?

Regards

[fomsand1]

Sure Kevin will treat CW with some takeaway for lunch

Hi KayNa, go to UKBA website and search for CHAPTER 6A, this is the guidelines used by CW to deal with/score settlement applications. It details out all you require to present as documentary evidence for employed or self employed applications.

Regards

[KayNa]

I've read success stories on this forum where applicants using self employed earnings to claim points present letters from their clients as a substitute for invoices.

Thanks for that.
I've had over 100 clients over the past 12 months, most of whom I doubt I'll be able to get in touch with at such short notice, however I have correspondence from all of them in the form of emails stating they've made an online transfer and a follow up email from me confirming receipt of payment.

All those payments match up with online transfers, so I was hoping that would be enough, but feeling a bit doubtful now if I needed to have generated complicated invoices as per the VAT guidelines...

[fomsand1]

To my understanding, these emails should suffice. To be honest, if you're not VAT registered or you turnover does not exceed 77k, then I don't think its necessary for you to produce invoices. The emails from clients confirming online transfers should actually match what went into your account and your accountant must verify these in his letterand detail how much you should be paying as tax for 2012/2013 financial year.

[KayNa]

Got my ILR today

I used the email invoices, and my accountant added a line to my letter saying that my main method of invoicing was electronic invoices in email format and that these are legally valid and meet statuatory requirements.

[katwmn6]

Hi KayNa,

Many congratulations on your ILR!

Could you kindly post details of exactly what your email invoices included, as well as a complete list of documents you submitted for proof of income? Also, did you submit contact details for all of your clients? (If so, what did you include - address, phone, email, etc?) Finally, did you have a business bank account or were payments transferred to your personal bank account?

My situation is very similar to yours (self-employed sole trader with dozens of clients and hundreds of small bank transfers as payment), and I had previously believed it was not possible to prove income on this basis, and thus I have been looking for a normal job. It would be incredibly helpful to me if you could detail exactly what information you and your accountant submitted in the end.

Many, many thanks!

[KayNa]

EMAIL INVOICES
I teach evening classes and people find my details on my website and send me an email asking how to sign up for the class. I then send back an email with my bank details, the price they need to pay, and the dates for which their enrolments are valid.
I later found out I should have had my business address (I'm self-employed, running a business under my own name, so it would have been my home address) and full name, and ideally an invoice number, but this is more relevant to VAT invoices.

I figured that since applicants could probably use those handwritten invoices from invoice books as evidence for payments, and those only have a space for date, name, price and item, then why not use the emails?

My accountant added a line to my accountant letter saying email invoices are legally valid and meet statutory requirements. I found a very helpful accountant who wrote a great cover letter and made me feel a lot more confident going to my PEO so if you're in London I'm happy to send you their details.

So I printed off all my emails which I sent to my clients confirming receipt of payment, highlighted their name on the printout and also the amount they paid, and attached them in the same order as they appear on my bank statements, so they could look at my bank statement and check each payment in order of receipt of payment.

Whenever I received cash or cheque payments I deposited them into my account so I could back those up as well.
I would recommend depositing them into your account separately, so if you receive a payment of £40 and £60 then rather than depositing a payment of £100 you should deposit £40 and £60 separately.
Don't stress if you haven't done that, because I had several payments of around £500 which were made up of several different payments, but I could prove with emails and handwritten receipts that I had received those cash payments, although I highly doubt they went through and checked each invoice as it only took 2 hours to process my case and it would have taken many more hours to go through each of my statements.

I actually deposited all my cash and cheque payments into my expenses account over the past year, which was a bit stupid because it made it less clear for the caseworker to check, but it didn't cause any problems in the end.


CLIENT CONTACT DETAILS
I took the enrolment forms for all of my students, which include name, age, address etc. however was concerned about data protection and didn't hand it over initially.
When they collected my application and evidence I asked if it's possible to submit more evidence later if required and they said yes so I decided to hold on to those and only hand them over if requested. I got my accountant to add a note in the letter saying that all invoices can be backed up by enrolment forms which verify name, age, address etc.

BANK ACCOUNT
I used my personal bank account. I have a savings account which I only use for incoming payments from students, so it made it a lot easier to separate those from my normal account which I only use for expenses.

That's not a necessity but if you're able to split your accounts between incoming and outgoing it will make it a lot easier to split them and make the caseworker's job a lot easier.

Anything you can do to simplify their job can only help your application.

When are you applying for ILR?

You can definitely apply under your circumstances.
I was also worried it wouldn't be possible because I couldn't find much info on this site or anywhere else about anyone having applied under similar circumstances, but if you get a good accountant and keep your accounts very clear and easy for the caseworker to check then you'll be fine.

I also pointed out how I earned my income in my cover letter and also in the application in the box where it says something like "Is there anything else you feel the caseworker should know about your situation".

When I saw my lawyer she crushed my confidence by saying that it's likely my case will get retained if the caseworker can't figure out how to process my application because of my unusual form of income, and that if a senior caseworker starts to look at my case then they'll have authority to reject my case so I should do everything I can on the day to avoid my case being retained.

Interesting to know that the initial caseworkers don't have the authority to reject applications, and that rejection is a complicated process so they try to avoid it (according to my lawyer anyway - please research further in case she was mistaken).

[katwmn6]

KayNa, thank you so much for your post; it is very helpful. To confirm:

1) The cash and cheque payments you included (those you deposited directly into your own account) counted towards your total income?

2) Did the caseworker ever ask to see your clients' contact details, or did the line in your accountant's cover letter suffice?

3) How long have you had your accountant? (Do you normally use an accountant or did you only employ one just to prepare for your ILR application?)

If you could kindly PM me the contact details of your accountant I would really appreciate it.

Thank you!!

[onabanjo]

Kevin24 wrote

I had to check the threshold

Threshold from 01/04/2012 is £77,000.

Just a point of correction, from 1st April 2013, Vatable turnover is from £79,000

[KayNa]

In response to the questions below:

1] Yes - I counted cash and cheque payments as part of my total income, also had scans of my cheques where possible and receipts or emails confirming receipt of payment

2] Caseworker didn't ask to see anything. I didn't even meet my caseworker. When my case was ready I was called in and they couldn't find my files or my caseworker and someone spotted a pile of papers and asked someone sitting behind a desk if that was my case. She put up her hands and said "I'm the last person you should be asking" then got up and had a look and said "oh yeah, it matches his name" and handed it over without even saying if there were issues or if I'd been approved. I had to keep pressing her for information to figure out what was going on - very baffling

3] It was the first time I've ever used an accountant, and I've been running my business for just over 2 years. They only charged my for the cover letter, not to do my taxes or anything, and were really helpful. I've no doubt that without them I wouldn't have gotten my visa as they helped me write a really detailed and clear cover letter, invoice summary and profit and loss (business accounts) tables.

These are the accountants I used and I highly recommend them to anyone, very helpful and friendly: http://howladerandco.com/

KayNa, thank you so much for your post; it is very helpful. To confirm:

1) The cash and cheque payments you included (those you deposited directly into your own account) counted towards your total income?

2) Did the caseworker ever ask to see your clients' contact details, or did the line in your accountant's cover letter suffice?

3) How long have you had your accountant? (Do you normally use an accountant or did you only employ one just to prepare for your ILR application?)

If you could kindly PM me the contact details of your accountant I would really appreciate it.

Thank you!!

[katwmn6]

Thank you so much KayNa; it's very much appreciated.

Final questions!

1. Is there anyone in particular you'd recommend at Howlander?

2. Would you mind saying (roughly) how much the accountant cost? (I have absolutely no clue as I've never used one before!)

3. Would you recommend the lawyer you worked with? If so would you mind posting/PMing their details as well?

[KayNa]

1] I'll PM you the name of the accountant who helped me out, not sure if it's ok to put their name on here.

They're not a massive organisation, which is what I liked about them, so you'll probably get the same accountant who worked on my case.
Since the place wasn't that big I got to chat with the director several times, he seemed very knowledgable and happy to help (added some key sentences to my cover letter which addressed a few of the issues raised in the guidelines and made me feel more confident in case the caseworker called him up to ask about my case - which they never did).

2] I'll put it in the PM.

3] My lawyer was very knowledgable and professional, and I'll PM you their name, but not sure if I'd recommend them to everyone to be honest.

They seem to specialise in helping more well off professionals than me, with more straight forward employment types (my lawyer was utterly baffled by how I earn money - self employed individual, not a limited company, collecting many payments from many individuals, keeping all profits - not the most common type of employment, but not overly complicated either. No matter how many ways I tried to describe my business model she just kept shaking her head and saying she couldn't understand it and that it was unlikely the caseworker would either, which was very frustrating and made me quite anxious).

To be honest, if you read through all the guidelines and gather all the information which relates to your situation, and read through this and similar sites, you'll be well equipped to fill out your application on your own.

The reason I got a lawyer was because I knew an ex-immigration lawyer through a friend and she said the process can be quite stressful if you can't figure out if you're doing the right thing, so it's worth having a lawyer go over your application form and point out anything you may have missed.

So for that, it might be worth getting a lawyer - added peace of mind and you'll kick yourself later if your case gets delayed etc. because you forgot to tick a box / provided wrong evidence etc., and also she pointed out a few sections which didn't actually apply to me and I could almost ignore, even though the form asks for me to address it (e.g. maintenance funds aren't necessary for Tier 1 applications but the form asks about it anyway), which was actually helpful.

Usually it's a long process where they ask you to provide various forms of evidence and fill out the application for you, which will end up being very costly.
I'd already filled mine out and had gathered my evidence, so she just went through it with me and checked everything was in order.

Thank you so much KayNa; it's very much appreciated.

Final questions!

1. Is there anyone in particular you'd recommend at Howlander?

2. Would you mind saying (roughly) how much the accountant cost? (I have absolutely no clue as I've never used one before!)

3. Would you recommend the lawyer you worked with? If so would you mind posting/PMing their details as well?