IT Contractor - HSMP Extension

[schindler]

Hi,
I am an IT contractor working in the UK under HSMP.I work through my own LTD company(I am one of the director)
drawing a monthly salary and quarterly dividends from my company.

My current leave ends in Feb2009 and I am applying for extension in a couple of days.
Could someone who has already got extension please clarify the following.

1)QUestion B26 says: 'The applicant should indicate whether they consider themselves to be employed or self-employed:'
I am not sure what to select here.I am employed through my OWN LTD company and I am also one of the director of it.Hence do I become employed or am I self employed as it is my own business?

2)To Prove previous earnings I am submitting my 12 month Payslip,12month bank statements and Dividend vouchers.
I am also planning to get a letter from my accountant corroborating my evidence.Are they enough? or do I have submit my company details,invoices etc.I don't mind submitting them,but I don't want to confuse the CW with too many information.

3)P9 in page 42 says'Please provide full contact details that will allow each of the documents provided to be verified if necessary. Please also provide here any additional information or explanation of the documentation sent, that will assist us in our consideration of the earnings being claimed. If more space is required, please provide the required information in a covering letter.'

To this I am entering the full address and contact number of my company,bank(HSBC) and my accountant.Will that suffice.
If home office call my company tel number it will be still me/wife who answers it!!.

4) For the maintenance of funds requirement there is no start and end dates given in the form.I want them to consider between two specific dates(totalling to 3 months) in the last 4 months.Will it suffice if I just mention in the dates in the
covering letter or should I make a note in the form as well.

Could you please advise as I need to submit the forms in 2-3 days.

Thanks

[nnj10]

Hi Schindler,

I am in the same boat as you are.
I am yet to apply for my T1(G) extension, but below is my take on your questions:

1)QUestion B26 says: 'The applicant should indicate whether they consider themselves to be employed or self-employed:'
I am not sure what to select here.I am employed through my OWN LTD company and I am also one of the director of it.Hence do I become employed or am I self employed as it is my own business?

I will use Employed (explain the situation in cover letter i.e. you are the director and shareholder of the company)

2)To Prove previous earnings I am submitting my 12 month Payslip,12month bank statements and Dividend vouchers.
I am also planning to get a letter from my accountant corroborating my evidence.Are they enough? or do I have submit my company details,invoices etc.I don't mind submitting them,but I don't want to confuse the CW with too many information.

12 month Payslip,12month bank statements and Dividend vouchers are sufficient. Plus use the letter from accountant to corroborate earnings (salary + dividend)
Will appreciate response from someone in the similar situation.

3)P9 in page 42 says'Please provide full contact details that will allow each of the documents provided to be verified if necessary. Please also provide here any additional information or explanation of the documentation sent, that will assist us in our consideration of the earnings being claimed. If more space is required, please provide the required information in a covering letter.'

To this I am entering the full address and contact number of my company,bank(HSBC) and my accountant.Will that suffice.
If home office call my company tel number it will be still me/wife who answers it!!.

You should be alright, I am gonna provide my own mobile no. as an employer, in addition to my bank's and accountant's.

4) For the maintenance of funds requirement there is no start and end dates given in the form.I want them to consider between two specific dates(totalling to 3 months) in the last 4 months.Will it suffice if I just mention in the dates in the
covering letter or should I make a note in the form as well.

Mention this in the cover letter and provide the bank statements to match......

[MyHSMPApplication]

:

1)QUestion B26 says: 'The applicant should indicate whether they consider themselves to be employed or self-employed:'
I am not sure what to select here.I am employed through my OWN LTD company and I am also one of the director of it.Hence do I become employed or am I self employed as it is my own business?

I will use Employed (explain the situation in cover letter i.e. you are the director and shareholder of the company

This is incorrect. You will be self-employed.

2)To Prove previous earnings I am submitting my 12 month Payslip,12month bank statements and Dividend vouchers.
I am also planning to get a letter from my accountant corroborating my evidence.Are they enough? or do I have submit my company details,invoices etc.I don't mind submitting them,but I don't want to confuse the CW with too many information.

12 month Payslip,12month bank statements and Dividend vouchers are sufficient. Plus use the letter from accountant to corroborate earnings (salary + dividend)
Will appreciate response from someone in the similar situation.

The above mentioned documents should suffice if you are self-employed. however if you show yourself as employed, then HO might question the validity of that claim based on the letter from your accountant. Accountant letter is only valid in case you are self-employed. If you are employed, then a letter from your employer should do the trick (in this case it would be SELF)

4) For the maintenance of funds requirement there is no start and end dates given in the form.I want them to consider between two specific dates(totalling to 3 months) in the last 4 months.Will it suffice if I just mention in the dates in the
covering letter or should I make a note in the form as well.

Mention this in the cover letter and provide the bank statements to match......

I guess you will have to read the guidelines properly. You cannot specify any 3 month period in the last 4 months. Instead the home office will only consider the last 3 month.

The guidelines says

In order to qualify for entry clearance or leave to remain under Tier 1, an applicant must show that he/she has enough money to support himself/herself.
Applicants in UK seeking further leave to remain must have atleast £800 of personal savings which must have been held for atleast three months prior to the date of application!

That clearly explains that the maintenance fund is something that you will have to have atleast for 3 months prior to the date of application.

Cheers
PG

[MyHSMPApplication]

In the same context let me ask you a question,
Do you take monthly dividends of Quarterly / annual dividends?

I take monthly dividends, and for 2 months I have clubbed my salary and dividends payment as a single bank transaction.

Do you reckon this is going to be an issue?

I remember reading somewhere that this might be an issue but please clarify

Cheers
PG

[schindler]

:

1)QUestion B26 says: 'The applicant should indicate whether they consider themselves to be employed or self-employed:'
I am not sure what to select here.I am employed through my OWN LTD company and I am also one of the director of it.Hence do I become employed or am I self employed as it is my own business?

I will use Employed (explain the situation in cover letter i.e. you are the director and shareholder of the company

This is incorrect. You will be self-employed.

Thanks.I just checked with my accountant and they say from their point of view my employment status is 'EMPLOYED' as I am employed by my company(even though i own 50% of it).So I a guess I am gonna stick myself as Employed

2)To Prove previous earnings I am submitting my 12 month Payslip,12month bank statements and Dividend vouchers.
I am also planning to get a letter from my accountant corroborating my evidence.Are they enough? or do I have submit my company details,invoices etc.I don't mind submitting them,but I don't want to confuse the CW with too many information.

12 month Payslip,12month bank statements and Dividend vouchers are sufficient. Plus use the letter from accountant to corroborate earnings (salary + dividend)
Will appreciate response from someone in the similar situation.

The above mentioned documents should suffice if you are self-employed. however if you show yourself as employed, then HO might question the validity of that claim based on the letter from your accountant. Accountant letter is only valid in case you are self-employed. If you are employed, then a letter from your employer should do the trick (in this case it would be SELF)

4) For the maintenance of funds requirement there is no start and end dates given in the form.I want them to consider between two specific dates(totalling to 3 months) in the last 4 months.Will it suffice if I just mention in the dates in the
covering letter or should I make a note in the form as well.

Mention this in the cover letter and provide the bank statements to match......

I guess you will have to read the guidelines properly. You cannot specify any 3 month period in the last 4 months. Instead the home office will only consider the last 3 month.

The guidelines says

In order to qualify for entry clearance or leave to remain under Tier 1, an applicant must show that he/she has enough money to support himself/herself.
Applicants in UK seeking further leave to remain must have atleast £800 of personal savings which must have been held for atleast three months prior to the date of application!

That clearly explains that the maintenance fund is something that you will have to have atleast for 3 months prior to the date of application.

Cheers
PG

Right Let me explain here.I am claiming my previous earning period between 06-jan-2008 to 06-jan-2009.Out of that I am using the period from 06-oct-2008 to 06-jan-2009 period for my maintenance funds requirement.The guidance says that 'Applicants in UK seeking further leave to remain must have atleast £800 of personal savings which must have been held for atleast three months prior to the date of application!
'.So if my date of application(date of posting) is 28-Jan-2009 and my bank statements is until 06-jan-2009 i think i am fine as the guidance notes says 'All evidence must be dated no more 202. than one month before the application is submitted.'.So since I apply in Jan the earliest date they can consider will be until Dec31st.So 06-Oct-2008 to 06-Jan-2009 should be fine for me don't you think?

[schindler]

In the same context let me ask you a question,
Do you take monthly dividends of Quarterly / annual dividends?

I take monthly dividends, and for 2 months I have clubbed my salary and dividends payment as a single bank transaction.

Do you reckon this is going to be an issue?

I remember reading somewhere that this might be an issue but please clarify

Cheers
PG

Declaring dividends by the company to its shareholders(in this case me or you) is entirely the company's prerogative.There is no hard and fast rule that it has to be monthly/quarterly.For argument sake you can even declare dividends daily(if u have the dosh),but its a norm that professional companies declare dividends in a reasonable gap, that being yearly/half yearly/quarterly.

While in theory its not unusual for a company's payroll to club an employee's payment(salary,bonus,dividends,re-imbursements etc) and pay in one shot,its always a good idea to have the salary and dividends as seperate transactions when the money comes from the company bank account onto your personal account.It makes the transactions clean and its easier for house keeping.Having said that I am not sure whether the case worker will take issue in seeing the salary and dividends clubbed together.

[nnj10]

MyHSMPApplication wrote:

Quote:

1)QUestion B26 says: 'The applicant should indicate whether they consider themselves to be employed or self-employed:'
I am not sure what to select here.I am employed through my OWN LTD company and I am also one of the director of it.Hence do I become employed or am I self employed as it is my own business?

I will use Employed (explain the situation in cover letter i.e. you are the director and shareholder of the company


This is incorrect. You will be self-employed.

Can I ask the reason, why is that a self-employed and not in an employment?

[republique]

MyHSMPApplication wrote:

Quote:

1)QUestion B26 says: 'The applicant should indicate whether they consider themselves to be employed or self-employed:'
I am not sure what to select here.I am employed through my OWN LTD company and I am also one of the director of it.Hence do I become employed or am I self employed as it is my own business?

I will use Employed (explain the situation in cover letter i.e. you are the director and shareholder of the company


This is incorrect. You will be self-employed.

Can I ask the reason, why is that a self-employed and not in an employment?

Because you own the company that employs you.

[nnj10]

republique wrote:

MyHSMPApplication wrote:

Quote:

1)QUestion B26 says: 'The applicant should indicate whether they consider themselves to be employed or self-employed:'
I am not sure what to select here.I am employed through my OWN LTD company and I am also one of the director of it.Hence do I become employed or am I self employed as it is my own business?

Quote:
I will use Employed (explain the situation in cover letter i.e. you are the director and shareholder of the company

Quote:
This is incorrect. You will be self-employed.

Quote:
Can I ask the reason, why is that a self-employed and not in an employment?

Quote:
Because you own the company that employs you.

Please go to this link:
http://www.direct.gov.uk/en/MoneyTaxAnd ... DG_4015975

If one is self employed then he/she has to register as self-employed with HMRC, but as the link says if you are operating within PAYE structure (In this case through a company in which you are controlling shareholder/director), then you are employed (through your own company).

Your own company can still afford to pay you a salary (and offer holidays), even if your company's regular cash generating main contract runs out(provided there is money in business).

[republique]

republique wrote:

MyHSMPApplication wrote:

Quote:

1)QUestion B26 says: 'The applicant should indicate whether they consider themselves to be employed or self-employed:'
I am not sure what to select here.I am employed through my OWN LTD company and I am also one of the director of it.Hence do I become employed or am I self employed as it is my own business?

Quote:
I will use Employed (explain the situation in cover letter i.e. you are the director and shareholder of the company

Quote:
This is incorrect. You will be self-employed.

Quote:
Can I ask the reason, why is that a self-employed and not in an employment?

Quote:
Because you own the company that employs you.

Please go to this link:
http://www.direct.gov.uk/en/MoneyTaxAnd ... DG_4015975

If one is self employed then he/she has to register as self-employed with HMRC, but as the link says if you are operating within PAYE structure (In this case through a company in which you are controlling shareholder/director), then you are employed (through your own company).

Your own company can still afford to pay you a salary (and offer holidays), even if your company's regular cash generating main contract runs out(provided there is money in business).

So what is your point?

[nnj10]

All I am saying is, even though someone is contracting through own LTD co, he/she is still employed with his/her own company (if operating within PAYE system), and for T1(G), you can claim to be "Employed", as opposed to "Self Employed".

[republique]

What I am saying is, even though someone is contracting through own LTD co, he/she is still employed with his/her own company (if operating within PAYE system), and for T1(G), you can claim to be "Employed", as opposed to "Self Employed".

Look if you are going to counter everyone else advice then why ask.
We are telling you from experience, the HO considers that scenario as self employed but you do what you want.

[nakvis]

The Eployment or Self-Employment will define the amount and class of National Insurance Contributions you are paying to the Govt. If you are Employee, then you will pay Class 1 (or 1A) NI and Self-Emploed people will pay Class 2 and 4 contributions.

If you know which class of NI you are paying you can decide whether you are employed or Self-Employment.

You can go to HMRC Website and seach for additional informaiton regarding Employee or Self-Employed....

[yhdyhd]

The Eployment or Self-Employment will define the amount and class of National Insurance Contributions you are paying to the Govt. If you are Employee, then you will pay Class 1 (or 1A) NI and Self-Emploed people will pay Class 2 and 4 contributions.

If you know which class of NI you are paying you can decide whether you are employed or Self-Employment.

You can go to HMRC Website and seach for additional informaiton regarding Employee or Self-Employed....

If you are applying for FLR, you'd better to look the guide of border agency, not HMRC.

[nakvis]

In UK, HMRC is the department which defines the terms Employee or Self-Employed.

Home office guidence does not define the terms Employee or Self-Employment.

[yhdyhd]

In UK, HMRC is the department which defines the terms Employee or Self-Employed.

Home office guidence does not define the terms Employee or Self-Employment.

If you just believe what you think, not what the home office said. Then you can go on with your thinking.

[yhdyhd]

In UK, HMRC is the department which defines the terms Employee or Self-Employed.

Home office guidence does not define the terms Employee or Self-Employment.

It is right that in UK, HMRC is the department which defines the terms Employee or Self-Employed. But unfortunately HMRC is not the department to deal with application of Tier 1.

[nnj10]

Republic wrote:

nnj10 wrote:
What I am saying is, even though someone is contracting through own LTD co, he/she is still employed with his/her own company (if operating within PAYE system), and for T1(G), you can claim to be "Employed", as opposed to "Self Employed".

Look if you are going to counter everyone else advice then why ask.
We are telling you from experience, the HO considers that scenario as self employed but you do what you want.
-------------------------------------------------------------------------------------------------------------------------------
Republic, I am not trying to argue and hence, will not reply to your point.

As Nakvis, has pointed out, if some one is paying Class 1 or 1A National Insurance (as employee/director of a company under PAYE), he/she is in Employment.

I am not sure for T1(G) Case Worker, how subjective assessment (Employment/Self Employment) this could be?!

[malim_sheikh]

Hi,

My extension is due in six months and I am thinking of the same set of documents and declare myself a salaried person. The only problem is that if they consider me a salaried person and decide to call my company, it will be me on the other side, which is not a favourable situation.

Aleem

[nakvis]

I have not heard, but there is every possibilty that the home office case worker can call HMRC to confirm the Employment status i.e. wheather Employee or Self Employment based on the NI number we give in the application.

When inquired, if there is a difference between the HMRC records and Our declaration in the Application, I am sure that the application will be rejected straight away.

Guys, please note that I am trying to write the information I am aware of, thats all. I am not trying to argue or counter someone else's comments.

Also I dont see any problem when someone declares as an Employee (When paying Class 1 or 1A NI's which is much higher than Class 2 for Self-Emploment), receives a call from Home Office for verification, we can justify and I dont see any wrong in that.

[schindler]

I have not heard, but there is every possibilty that the home office case worker can call HMRC to confirm the Employment status i.e. wheather Employee or Self Employment based on the NI number we give in the application.

When inquired, if there is a difference between the HMRC records and Our declaration in the Application, I am sure that the application will be rejected straight away.

Guys, please note that I am trying to write the information I am aware of, thats all. I am not trying to argue or counter someone else's comments.

Also I dont see any problem when someone declares as an Employee (When paying Class 1 or 1A NI's which is much higher than Class 2 for Self-Emploment), receives a call from Home Office for verification, we can justify and I dont see any wrong in that.

I think nakvis and nnj10 are correct in what they are saying.As told in my previous post I have checked with my accountant and they think I am employed and not self-employed.I am applying in a couple of days, will keep u peeps posted

[Abi2009]

Also I dont see any problem when someone declares as an Employee (When paying Class 1 or 1A NI's which is much higher than Class 2 for Self-Emploment), receives a call from Home Office for verification, we can justify and I dont see any wrong in that.

By the way, if you are covered by JR, then I think your FLR(HSMP) will be considered based on economic activity, not necessarily your monthly salaries.

Even if your not covered by JR, I don't think NI and all matters so much here. What matters is how much you have earned (salary + dividends in this case) during the last one year. All they are going to see is whether your salary/dividend figures and and credits match in Bank statements.

If you own your limited company and you are 100% shareholder, and even if you are "employed" by your own limited company, I feel it is appropriate to declare yourself as self employed rathar than employed.
Then in that case, you need to provide company bank statements, Invoices to the clients, and client contract documents as evidences.

[nnj10]

Abi2009 wrote:

If you own your limited company and you are 100% shareholder, and even if you are "employed" by your own limited company, I feel it is appropriate to declare yourself as self employed rathar than employed.
Then in that case, you need to provide company bank statements, Invoices to the clients, and client contract documents as evidences.

As far as evidence of earning is concerned, you are claiming points for your personal earnings and you are not required to declare source of your company's earnings. The reason being, you don't want to confuse, the case worker with multiple documents. In my opinion the following documents should suffice.

1) Salary Slips for earning period
2) Dividend voucher for earning period
3) Personal Banks statements for earning period

You should also ask your accountant to write a letter for you, confirming your share-holding in the company.

[malim_sheikh]

I agree with nnj10, salary slips, dividend vouchers and personal bank statement fulfill the requirement of two evidences for each source of income. Even accountant letter for shareholding percentage is required when you have not withdrawn the money from company account and want to declare it as your income.

[inlondon2005]

Q/-schindler R U doing another job besides showing yourself IT contractor?

I am asking just because thou you want to be Employed not self-employed using PAYE format (do u have) to declare your NI No as you work for some company who pay you the salary which is below the salary you require to claim the earning points and you with the help of your Accountant formed a Company and bank account to pay yourself the rest of your required income as salary using same NI No.

Just want to know. if yes when did you made your company and open the business bank account? do clients make payments in to your company account through DD or cheques?