Tier 1 (Ent) ILR - Director's remuneration

[bottlefeed]

Hi all, I've had such helpful replies to my own question that a friend of mine is asking me to help post his question here for him. He is preparing to apply for ILR after 5 years on Tier 1 (Entrepreneur) visa where he runs his own business. At first everything looks ok but then he found out that director's remuneration cannot be counted towards his investment.

He extended his visa 2 years ago, but because he invested a bit more than the £200k required (most by share capital and a smaller sum by director's loan), the issue of director's remuneration was not picked up. He was actually about £2k short of £200k 2 years ago but this wasn't picked up by Home Office and he was granted further 2 years. But now 2 years later, he has continued to draw salary from the business (which has been making a small lost in the last 2 years so can't claim profit/dividends), till now he's drawn out about £40k in director's remuneration in the last 2 years combined (including the £2k shortfall from before).

So question is how to fix this? Would putting the £40k back by way of director's loan or additional share capital help? Or does the fact that the guidance say there's no need to include evidence that investment has been made mean that nothing has to be provided and he only need to show employment of settled workers and that he continues to be a director of the company (plus other docs like English, life in UK etc)? He's company bank statements quite clearly shows semi-regular salary payments to himself so that's quite obvious. Is there also the risk that if HO finds out that there was £2k missing from the last time they'd end up curtailing his visa?

Anyone had any experience with similar issues and how was it solved? There's still about 2 months until his visa expires so there's still some time to correct this (if it can be corrected).

Any suggestions would be much appreciated! Many thanks in advance!

[zimba]

Who said you are not allowed to get any remunerations ?? Only remuneration paid from the invested money is NOT accepted, not all remuneration. If remuneration are paid from the generated business income, then there is no problem.
Also he does NOT need to prove his investment again during ILR as he got all the points during extension. As HO accepted his investments previously, he should not worry at all. He needs to simply show that he is an active director and created 24 months of employment during his extension period to be eligible for ILR.

[sm12]

Hi Zimba

I know this has been discussed on the entrepreneur forum, and there were many there who opined that in order to withdraw a salary, one's business must be in profit. Do you think people should do that just to be on the safe side?

[zimba]

Hi Zimba
I know this has been discussed on the entrepreneur forum, and there were many there who opined that in order to withdraw a salary, one's business must be in profit. Do you think people should do that just to be on the safe side?

To be safe, your investment and the the turnover need to cover your expenses first. Then anything left from the turnover can be taken from the business as remuneration.

[bottlefeed]

Policy Guidance version 07/2015 - Page 20, paragraph 48 states:

"For the purposes of the above, ‘invested’ or ‘spent’ by your business’ excludes spending on all of the following:
Tier 1(Entrepreneur)
1) your own remuneration"

Again at paragraph 51:
"If you already have leave as a Tier 1 (Entrepreneur) migrant we may curtail your leave if the funds you have used to apply cease to be available to you (unless you have spent them in the establishment or running of your business or businesses). ‘Invested’ or ‘Spent’ excludes spending on your own remuneration."

Hence my thought that unless business is making profit and he's drawing salary from the profit, he can't pay himself. Currently business is making a loss still.

Thoughts?

[zimba]

Being in profit and loss has no effect. Your turnover could be in millions and your company can be in loss.
You can pay yourself salary from TURNOVER irrespective of your company being in loss or in profit. It all depends if you are paying the invested money back to yourself or not.

[seasky]

You can also pay yourself from investment above £200K