Salary from business account

[Meesha]

Dear Forum members,
I have paid salaries to my employees in cash for 5 months and have not withdrawn money from business bank. Will it be a problem for ILR application?
Thanks in advance

[marcnath]

Dear Forum members,
I have paid salaries to my employees in cash for 5 months and have not withdrawn money from business bank. Will it be a problem for ILR application?
Thanks in advance

Don't see why it should. Anyway you don't have to submit any bank statements

[Meesha]

Thanks for quick reply.
My accountant wants it through business bank as he will enter it in annual accounts only if it is through business bank. I believe i have to submit all years annual returns? Is there any way to fix it.

[marcnath]

Thanks for quick reply.
My accountant wants it through business bank as he will enter it in annual accounts only if it is through business bank. I believe i have to submit all years annual returns? Is there any way to fix it.

Did he not do the PAYE and all the HMRC submissions?

[sm12]

Thanks for quick reply.
My accountant wants it through business bank as he will enter it in annual accounts only if it is through business bank. I believe i have to submit all years annual returns? Is there any way to fix it.

You do not have to submit annual accounts for ILR. I'm guessing you are applying under the five year route? You must have already shown investment at the extension stage, so no need for annual accounts or returns.
However, your accountant should show the salaries in the annual accounts irrespective of how you paid your employees. It's not illegal to pay employees in cash, so there's no reason why he shouldn't.

[dnf]

Paying salary in cash is perfectly fine but you need to be careful of the follows:

1. Was the cash withdrawn from the business account? If yes, than your accountant should be able to allocate it under salary expense, in line with the RTI/FPS submitted to HMRC

2. If the cash was not withdrawn from the business account than where did you get the cash from? If your clients paid in cash than it first need to be declared as your company income, which can than be used to pay wages.

3. If the cash was not paid from the cash income received from the clients than you need to ensure where did you get the cash from.

I highly doubt if home office would raise any of the above queries - however, the above queries could be raised during an interview, which is being the norm during entrepreneur visa and dont think should impose any problems during ILR.

The above will be needed in case if an inquiry is raised by HMRC, which is outside the scope of your initial query.