Hi guys. What do you have to spend your money on as a tier 1 entrepreneur for it
to be a qualifying investment for the purposes of your extension application
or your indefinite leave to remain application. The answer is these sorts of
investments so on office costs for example station your phone bills travel
costs for example fuel parking train or bus fares clothing expenses for example
uniforms although I'd bracket that one, staff costs salaries or subcontractor
costs I wouldn't be relying in terms of a salary on your own salary on your own
remuneration financial costs insurance bank charges stock or raw materials
costs of your business premises advertising and marketing and training
courses. Now the reality is in order to show that it's a qualifying investment
we'll go to the rules in a minute you only need to show your business account
and this matter very important points to bear in mind but the business accounts
for a small business if you started your own business rather than investing into
investing - under K into a business in the UK if it's your own small business
your accounts wouldn't generally show the particular payments and your
accountant wouldn't normally be expected to do that so just be global figures so
there's a question of how does the Home Office actually assess whether the
actual spending behind the accountants figures was qualifying spending and the
rules basically operate by way of exclusion rather than telling you what
you should invest in it they say what you can't invest in what doesn't account
towards the points award. But nevertheless and there is guidance by
other government government agencies which is of perhaps indirect effect
there's nothing so that this would directly be applied but this is the list
that I've just gone through is from HMRC's list of examples of what our
business expenses than expenses on new personally and
under previous iterations of the tier 1 entrepreneur guidance personal
remuneration has been excluded from your qualifying 200k investment and you can
understand why that might be the case because if it's rather circular isn't it
if the 200k goes back into your pocket although having said that directors
loans etc are permitted under certain conditions so let's just have a let's
just have a look now I'd like to just start before going any further by saying,
first of all do feel free to contact me. I'm a lawyer based in London, I'd be very
happy to assist you if you're looking at applying for a tier 1 extension or for
settlement under the tier 1 entrepreneur rules the point I wanted to make here is
that this route has effectively been closed down with some exceptions so this
is really of relevance to you if you've already got your initial
application through so extension applications for tier 1 entrepreneur
applicants will remain open until the 5th of April 2023 and settlement
applications until the 5th of April 2025 and now I know there are a great many of
you out there and I've just put this up because this I won't read it all out but
this this deals with the with the exceptions not the important points now
this is the bit I really wants to highlight let me just zoom in on this
this is the these are the points oh yeah these are the points requirements if
you're applying for a tier 1 entrepreneur extension so you need to
show to get your 20 points for this part of it that you've invested or have
caused investment to be made by one or more third parties of at least 200,000
or 50,000 that's you know he had a seed funder for example those cases tend to
be rare so it's two hundred thousand for our purposes in cash directly into one
or more UK businesses. You do not need to provide evidence of this investment if
you're awarded point under this table on your last grants of entry clearance now
that would be rare upon an extension that you had
already been awarded points in the sense of having already invested before
your initial application in the company before applying. Now it is possible to do
that no but you invest your 200k in a company and then you make your initial
application French entry clearance and why someone would do that, I do not know
but it has it has been done it does happen episode that but that's
rare most people will have invested in the company after their visa has been
granted as one might expect so that's the point a requirement . Now what this
boils down to is the specified documents and let me just zoom in on this so you
can see it properly. You must provide your specified accounts and accompanying
evidence of investment now if your business is a registered company which
is required to produce audited accounts the audit accounts must be provided with
your application if your business is not required to produce audited accounts
unaudited account and an account our compilation report must be provided from
an accountant now make sure that your accountant is qualified in a way that's
specified under the rules because there are applications that are refused on the
basis that the accountant isn't a qualifying accountant for the purposes
of these rules and and then if you have to produce further evidence or sometimes
there's not time necessarily to do that so you've got to get it right first time
now this says that the audited or annulled accounts must show the
investment in money made directly in the business by one or more of the following
Now this is an interesting point because the other day I spoke with a new
client I'm onboarding now but unfortunately several months ago when he
was not represented he is off his family member
made an application for a tier 1 entrepreneur extension which was refused
the reason being that the that the 200k was transferred to one of the company's
directors first and then into the business so he was investing into an
existing business rather than setting up his own business but in this case their
money had been paid over to one of the directors and then the director had used
it to purchase shares on behalf of the visa applicant, what a disaster because
it meant that the application that the extension application was refused and he
and his family had to had to return to their country to the country of origin
and I'm assisting them in resolving the situation now applying under an
alternative route but the the lesson learnt by him was that the the
investment must be made directly in the business quote unquote directly in the
business not far into an intermediary. The decision was a harsh one because the
Home Office must have what they have applied the rules very strictly and
that that illustrates the point and if you've made the investment in the form
of a directors loan. Now that it's probably really not to be recommended
but it is possible to do it in the way that sets out in this rule in the rules
here I won't focus on that for the purposes of this video if you've made
the investment in the form of share capital the accounts must show the
shareholders the amount of value of the shares
now that is possibly the most straightforward way of showing that the
200000 was made in it was invested and spent in the course with the rules
because it's it I says share purchase agreement and you'd you'd show the the
the SBA but those those are the specified documents there as I say the
business accounts won't normally show exactly how the money has been spent so
it's unclear how the Home Office makes that assessment
nevertheless the where people have encountered refusal as I understand in
relation to the use of intermediaries and where accountants haven't been
qualifying accountants. Now let's just see if there's any important point I can
help you with here. Yeah property I mean I've done that a couple of videos on
this channel about purchasing property about the property exclusion and where
the boundaries of of it are both for Tier one investor and for tier 1
entrepreneur but the provision here says that if you've bought property as part
of your business investment the value of any residential accommodation cannot be
included that much is clear you must provide an estimate of the value of the
residential accommodation if it's part of the premises yeah so that that's
just a point for completeness as I say if you do want assistance with a tier 1
entrepreneur extension where I haven't been instructed for for the initial
application let's say and all you are applying for a settlement then please
feel free to get in touch, there's lots of aspects of this which need project
management and advice including as well job creation and the the jobs that you
need to create and we're just very quickly where there can also be issues
is where people don't pay the minimum where at tier 1 entrepreneurs don't pay
their employees the minimum wage or they're not able to show that they were
paid the minimum wage for the full period or where the job role has
been cut short because someone has resigned early and they can't show
a 12-month term for the role and we're asking people encounter
difficulties yeah with right-to-work ironically one of one of the challenges
seems to be showing that right-to-work checks were conducted by the tier 1
entrepreneurs all their businesses on the employees who are being cited in the
extension application or in the settlement application, so in other words
well right-to-work checks actually done on those employees and not doing
right-to-work checks doesn't have any immediate sanction but it means that if
someone then if you know your employee as a tier 1 entrepreneur then overstays
for example then you wouldn't have a statutory defense against a civil
penalty or indeed against criminal proceedings so it's those kind of
unexpected areas where two entrepreneurs can be caught out because there are
still a great many tier 1 entrepreneurs and lots of extension applications and
settlement applications to be coming up up to 2025, it's still an area to be
monitored. Hope this was helpful if it was feel free to subscribe for more
similar videos on this topic and I will see you in the next video