tier 1 entrepreneur EXTENSION refusal PLEASE HELP

[Digpal]

Hi Everyone,

I have applied for my tier 1 entrepreneur Extension (50k) in December 2016 and received refusal yesterday.

I have received points in everything except the Investment section.

I will explain the case -
I got my visa and showed 50K in my personal bank account when I initially got my visa but I have invested that money into the business in parts in 3 years of time whenever needed (total - £45,850 invested from my personal bank account), I have had a separate business savings account linked to my normal business account where I kept some money I took from my business as dividends and salary and reinvested that money into my business in 3 years time in parts (Total - £25,500) total of both invested fund in my business is £71,350 in 3 years of time.
I have created all the relevant Directors loan agreement of all the investment made.
I have been told by my solicitor and the accountant that the money I reinvested from my business savings accounts to the main business account will be considered as valid as that money belongs to me and I took the money out of my business savings account to the main business account as the dividends earned.

Now I have received the result and the caseworker gave me points in all other sections including job creation, genuinely of business etc but he said -

"You have stated that you have invested, or had invested on your behalf, at least £50,000 into one or more businesses in the United Kingdom.
You have provided the following evidence to demonstrate this:
• Business bank statements xxx Limited
• Directors Loan Agreements
• Unaudited accounts for 2014, 2015 and 2016

Paragraph 46-SD(a)(iii) states as follows; If the applicant has made the investment in the form of a director's loan, it must be shown both in the relevant set of financial accouts provided, and through readily identifiable transactions in the applicant's business bank statements, which must clearly show the transfer of this money from the applicant to his business.

We have calculated that in total £45,850 has been invested into xxx Limited. There are transactions of a further £25,500, referenced 'my business savings account number (removed account number for security)', that have been transferred into your business bank account, however, this money has been transferred from an account which is also a business bank account for xxx Limited. This is not acceptable as money which is already in the business cannot be used as investment thus, you have failed to show an investment through readily identifiable transactions, clearly showing the transfer of money from you to your business.
You have therefore failed to invest or had invested on your behalf, at least £50,000 into. one or more businesses in the United Kingdom in accordance with Appendix A.
We have therefore been unable to award points for Attributes."

The caseworker didn't consider the fact that the money in the separate business savings account was my own earned money invested back to the main business account by myself with the director's loan agreement, and they are two separate accounts.

Now my question is -

1) How can I argue this in the Admin Review
2) If in worst case I fail in the admin review, if I invest £5000 from my personal account to the business account now and create the directors loan agreement and apply as fresh application (now I will have £45,850 + £5000 = £50,850 invested capital from my personal bank account) what are chances of success as they have given me points in all other sections already and I will submit the same documents again.

Please help me with the guidance of further action, and my apologies for this long post but I wanted to provide full information to get right suggestions.

[sm12]

Very sorry to hear about this.
Do you mean you transferred funds to the savings account first and then to the business current account?
Also, you should invest the remaining £5,000 while you apply for admin review, to maximise your chances of succeeding at the second application stage, if required.

[Digpal]

Very sorry to hear about this.
Do you mean you transferred funds to the savings account first and then to the business current account?
Also, you should invest the remaining £5,000 while you apply for admin review, to maximise your chances of succeeding at the second application stage, if required.

Thanks @sm12

I already have the fund available in my personal savings account and will transfer the money from my personal savings account to the business account first thing in the morning tomorrow and will create the director's loan agreement as well. So that it will be shown in business bank statement of this month (July 2017) by the time I hear back from the AR decision.

[Digpal]

Very sorry to hear about this.
Do you mean you transferred funds to the savings account first and then to the business current account?
Also, you should invest the remaining £5,000 while you apply for admin review, to maximise your chances of succeeding at the second application stage, if required.

Sorry, forgot to answer to your first question.

So basically I transferred the money (dividends) from my business current account (main business account) to the business savings account instead of transferring the divident to my personal savings account. After that whenever I needed that money in my main business account I then transfered it from the business savings account to my main business account.
The reason I did that was because most of the time my invoices from client get paid late and I needed money to pay employees etc so I thought I will keep my divident money in the business savings account as its easy to just transfer the fund between linked accounts and my accountant told me that its fine.

Sorry for the confusion between accounts, I will make it clear here -

So there are three accounts

1) Main business current account (I use it for my business activities everyday)
2) Business savings account (This is the account which is a business savings account and on the name of my business and linked to my main business account, same as cash ISA or regular saver account in personal account), I have used this account only to transfer my dividents from the main business account to this account and then transferred that fund to my main business account whenever I needed for business.
3) My personal savings account - (This account I use to receive my salary and have my personal savings etc and I use it for my daily personal use)

I hope this will clear the confusion between accounts

[sm12]

OK, thank you for the detailed explanation.
In that case, you will have to reapply , which you can do within 14 days of refusal. If in that much time, you are unable to get all the required documents like accounts, then you could try AR first. It is unlikely that AR will succeed here but in the meanwhile, you can prepare your next application.

[Digpal]

OK, thank you for the detailed explanation.
In that case, you will have to reapply , which you can do within 14 days of refusal. If in that much time, you are unable to get all the required documents like accounts, then you could try AR first. It is unlikely that AR will succeed here but in the meanwhile, you can prepare your next application.

Thanks SM12

You mean it's not right to use the dividend money as investments?
Is there any way I can argue in the AR?

I will prepare for the second application but that means I will become overstayer and I have applied with my wife (dependent) and she will have to leave her job while the second application is in process?

This will affect in the 5year and 10 year ILR route as well? I've been in the country for 7years now

Please guide

[sm12]

Thanks SM12

You mean it's not right to use the dividend money as investments?
Is there any way I can argue in the AR?

I will prepare for the second application but that means I will become overstayer and I have applied with my wife (dependent) and she will have to leave her job while the second application is in process?

This will affect in the 5year and 10 year ILR route as well? I've been in the country for 7years now

Please guide

You can use dividends but you must withdraw them and put then in your personal account. This is because for the purpose of this route, you must show transfers from your personal account to your business account.

You can explain that dividends have been declared (and point out where this has been shown in your previous application, if at all), but I don't think HO will accept this argument. Maybe other members can advise how to deal with this successfully.

If AR is turned down, and you make a new application within 14 days, then it will not affect your ILR.

Your wife's leave expires at the same time as you? In that case, I think yes, she would have to stop working.

[marcnath]

Thanks SM12

You mean it's not right to use the dividend money as investments?
Is there any way I can argue in the AR?

I will prepare for the second application but that means I will become overstayer and I have applied with my wife (dependent) and she will have to leave her job while the second application is in process?

This will affect in the 5year and 10 year ILR route as well? I've been in the country for 7years now

Please guide

You can use dividends but you must withdraw them and put then in your personal account. This is because for the purpose of this route, you must show transfers from your personal account to your business account.

You can explain that dividends have been declared (and point out where this has been shown in your previous application, if at all), but I don't think HO will accept this argument. Maybe other members can advise how to deal with this successfully.

If AR is turned down, and you make a new application within 14 days, then it will not affect your ILR.

Your wife's leave expires at the same time as you? In that case, I think yes, she would have to stop working.

A correction here - It is generally accepted that you cannot withdraw dividends and reuse it as investment.

The rules explicitly exclude your own remuneration from funds recognised as investment for the purpose of showing funds available to you. And dividends are your remuneration.

By the way, are you self employed or a limited company ? You may still have some argument if you were self employed but there are a lot of things that have to fall in place.

As sm12 pointed out, your chances on AR are slim, sorry.

[sm12]

Hi Marcnath,

If a person withdraws funds into his or her own account, and then later transfers these funds to the company, would this necessarily be an issue unless the original amount (from the initial application) is no longer available to the applicant? I know of one case where the dividends withdrawn were later reinvested, and it didn't cause a problem, though normally one would expect the applicant to use the original funds for investment.

[Digpal]

Thanks SM12

You mean it's not right to use the dividend money as investments?
Is there any way I can argue in the AR?

I will prepare for the second application but that means I will become overstayer and I have applied with my wife (dependent) and she will have to leave her job while the second application is in process?

This will affect in the 5year and 10 year ILR route as well? I've been in the country for 7years now

Please guide

You can use dividends but you must withdraw them and put then in your personal account. This is because for the purpose of this route, you must show transfers from your personal account to your business account.

You can explain that dividends have been declared (and point out where this has been shown in your previous application, if at all), but I don't think HO will accept this argument. Maybe other members can advise how to deal with this successfully.

If AR is turned down, and you make a new application within 14 days, then it will not affect your ILR.

Your wife's leave expires at the same time as you? In that case, I think yes, she would have to stop working.

A correction here - It is generally accepted that you cannot withdraw dividends and reuse it as investment.

The rules explicitly exclude your own remuneration from funds recognised as investment for the purpose of showing funds available to you. And dividends are your remuneration.

By the way, are you self employed or a limited company ? You may still have some argument if you were self employed but there are a lot of things that have to fall in place.

As sm12 pointed out, your chances on AR are slim, sorry.

Thanks marcnath

So you means that the dividends cant be shown as investment even when I took the money out of business and reinvested after few months? I didnt just take the money out and reinvest the same time and same amount. I took money out gradually in small amounts and re-invested back in business gradually in small amounts whenever I need and as much as I need to maintain the business.

I am on payroll by my Limited company.

[Digpal]

@SM12 -

Answering your earlier question,
Yes its clearly mentioned on the cover letter provided in the original application that I have taken the money out as dividends and paid all the necessary taxes on that and declared it in my self assessment tax in all 3 years accounts, so basically that money belongs to me now and then I reinvested back into business.

Its all clearly explained in the original cover letter but the case worker didnt consider or read that.

[zimba]

You cannot reinvest the money back to your business. The assumption is that you have been given a visa as you claimed to have access to all the funds during initial. As per rules you cannot lose access to those funds at all until they are invested. Using your own remuneration to reinvest the funds is clearly not accepted

[Digpal]

You cannot reinvest the money back to your business. The assumption is that you have been given a visa as you claimed to have access to all the funds during initial. As per rules you cannot lose access to those funds at all until they are invested. Using your own remuneration to reinvest the funds is clearly not accepted

Hi Zimba88

Thanks for your reply
So moving forward what would you suggest I should do now?

[zimba]

Invest the money from your own personal account and prepare the accounts as required. It is a long shot as the money must be invested fully during initial but that is the only option for you

[awan905]

Sorry to hear this and first of all the case worker is right and your solicitor has misguided you. Further it seems that you didnot follow this form properly and did not understand the investment meaning. £50k investment must be transfer from your personal account to business account, you did 45k in correct way but the rest 25k is wrong, it should first go in your account and then into business, however you cannt take funds out from those 50k and that has to be absorbed my business............keeping the story short, apply for AR in order to get some extra time, in meanwhile further inject 5000 pounds from PERSONAL to BUSINESS account and make your investment totalling 50k and then submit a new application.

[marcnath]

Hi Marcnath,

If a person withdraws funds into his or her own account, and then later transfers these funds to the company, would this necessarily be an issue unless the original amount (from the initial application) is no longer available to the applicant? I know of one case where the dividends withdrawn were later reinvested, and it didn't cause a problem, though normally one would expect the applicant to use the original funds for investment.

Yes, the law is open to some interpretation here. Which is why I mentioned that "it is generally accepted ...." rather than stating it as a definite no.

I think OP has grounds for arguing on AR, though it depends on a couple of other things on how the accounts were structured, etc.

[marcnath]

Thanks marcnath

So you means that the dividends cant be shown as investment even when I took the money out of business and reinvested after few months? I didnt just take the money out and reinvest the same time and same amount. I took money out gradually in small amounts and re-invested back in business gradually in small amounts whenever I need and as much as I need to maintain the business.

I am on payroll by my Limited company.

The timing of your withdrawals and deposits don't matter.

It is tougher on a limited company since it is tougher to argue that the money in the saving accounts was your money, but It is not impossible if your books have all been done correctly.

Because you can't resubmit accounts or anything else for your AR, you only have a chance if it is all done correctly in the first place.

[marcnath]

Sorry to hear this and first of all the case worker is right and your solicitor has misguided you. Further it seems that you didnot follow this form properly and did not understand the investment meaning. £50k investment must be transfer from your personal account to business account, you did 45k in correct way but the rest 25k is wrong, it should first go in your account and then into business, however you cannt take funds out from those 50k and that has to be absorbed my business............keeping the story short, apply for AR in order to get some extra time, in meanwhile further inject 5000 pounds from PERSONAL to BUSINESS account and make your investment totalling 50k and then submit a new application.

I think it arguable if the case worker was right. Without having detailed information I can't be 100% sure - It is quite likely that the refusal is correct but the reason given may be wrong.

[Happydays11]

i think problem is you transferred the funds from business saving account to business account. if you have done it from personal account and received salaries when there is turnover, there shouldn't be any issues....

[marcnath]

i think problem is you transferred the funds from business saving account to business account. if you have done it from personal account and received salaries when there is turnover, there shouldn't be any issues....

While the easiest way to meet the requirements for the investment by DL is to transfer money from your personal account to a business account, the immigration rules do not specify that the transfer should be from a personal account.

[Happydays11]

Accountant even increase DL if directors generate RTI but did not take salary to bank, it's normal accounting paratice , this typo shows in accounts but not on bus st.

If you are running business with good transactions you could go wrong

[Digpal]

Thanks everyone,

Just to update, I have applied for AR on 13th of July 2017 and still awaiting any reply.
I had also transferred £9000 from my personal account to my business account before applying for AR in case I have to submit a fresh application.

I have one big question to everyone, will this new investment be accepted if required?
Any related application you guys know where anyone invested fund after the initial grant?

Please let me know I am really worried.

[Aab1988]

fresh investment was accepted in my case

[Digpal]

Hi Everyone,

I am just updating the forum as I received the reply on my Administrative review today and I am happy to say they overturned the decision and granted me the Visa.

It was a really hard time and everyone told me that I will not get my visa in admin review.
But I studied all the UK company law and immigration law and made a strong review case and by god's grace, I received the letter from the Home office this morning saying they overturned the decision & granted me the leave to remain and I will receive my BRP card within 7 working days.

[Digpal]

Below is my timeline
Applied - 6th December 2016
Biometric letter - 16th December 2016

No letter received from home office until July 2017

Visa refused letter - 5th July 2017
Administrative review submitted - 13th July 2017
Email from case worker saying they will take more than 28 days to review my application on - 10th August 2017
Approval letter received - 21st Aug 2017 with Documents and passport
BRP...waiting