Thank you for your response.
I will try to clear my points 1 by 1..
1) When i try to apply online through UKBA website. while filling the details it actually ask "Where is your Passport / travel document". it gives the option "Child Born in UK- passport with home government". So i think i will be fine if i make online application. after completing online application they ask us to send the documents by post. please see attached image for more info.
2) thank you for your clarification on maintenance funds. i should be fine as i am making application for my dependent at the same time as main applicant.
3) HMRC have online repayment system. Please visit the following link.
if i make payment to them online and submit my bank statement to UKBA to proves that i have made a re-payment to HMRC. is this enough? as i might not receive any letter from HMRC by the time i make application to UKBA.
4) i am also not convinced about making an PEO appointments without my original passport. so this point is clear.
Now the only details i want is the HMRC thing. if you can visit the link i have provided and let me know some more details on how UKBA proceeds with this kind of application.
your time much appreciated.