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Thomas
Thomas, Lawyer
Category: UK Law
Satisfied Customers: 6309
Experience:  BA (Hons), PgDip, Practising Solicitor
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Hi, My question is regarding Tier 1 Entrepreneur, I got

Customer Question

Hi,

My question is regarding Tier 1 Entrepreneur, I got T1 Entrepreneur visa (PSW Route 50K) . I initially set up a business consultancy company and we got visa issued, Now we have an offer from a retail company (Which has quite big set up in UK) to become their director & made 50k investment in form of Unsecured director loan (this money they will use to open more outlets) . Is this investment acceptable , also Is there any restriction on level of businesses on PSW route ? Being director of the new company we will be given salary and annual interest on our director's loan , but we will not be a shareholder ...
Submitted: 1 year ago.
Category: UK Law
Expert:  Thomas replied 1 year ago.
Hi,

Have you not invested any money in to the business consultancy company?

Tom
Customer: replied 1 year ago.
No I have not invested any money in that business yet. That consultancy business is running but we recently got this proposal to invest in the other company .
Expert:  Thomas replied 1 year ago.
Hi

Thanks for your patience.

The first point to make is that you are not automatically ruled out of making an application because of this. If you meet the eligibility criteria for an extension you should still be successful.

As to whether or not you might meet the criteria, the following points should be made;-
- If you are a registered director of the company then you meet this criteria provided that you remain a director and are able to produce evidence that is not older 3 months before your extension application that this is the case
- The criteria for an extension is that your investment or services that you have provided must have resulted in the equivalent of two full time jobs being created. So, you need to establish what has happened to the £50 investment that you have made. If it is a big company then it may be difficult to find exactly what has happened to the money but you should try to and consult those other executives of the business to make the aware of your requirement.

If you are able to show that the money has effectively created two jobs then it’s fine. If you are not then you will have to show that the services you have provided as director have resulted in two jobs being created if you are not directly able to show it because of the money

The bigger problem is that the investment is in the form of a directors loan. Please refer to 72 of the following guidance:-
http://www.ukba.homeoffice.gov.uk/sitecontent/applicationforms/pbs/tier1entrepreneurguidance1.pdf
You will note that these are only permitted to be classed as investment if the loan is unsecured and subordinated to third party creditors. You will have to see if the loan complies with this. Assuming it is a big company I would expect it not to, so if this is the case then you may consider declaring that the loan is a capital investment rather than the loan status that it has now.

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Kind regards,


Tom
Customer: replied 1 year ago.

Dear XXXXX,


 


Thanks for your reply, Just wanted to confirm few things here,


 


If we (me & my entrepreneur partner) become the directors of that retail company, we will be only directors not share holders , is that still acceptable ?


 


Also the loan we will be giving a director loan would be unsecured and subordinated to the third party creditor, Is this find ?


 


Thanks in anticipation

Expert:  Thomas replied 1 year ago.
Hi,

Yes, there does not appear to be a requirement that you become sharesholders on the guidance.

A directors loan in the circumstances would also be acceptable but please also note the further conditions contained here at 102(iii) on page 21:-
http://www.ukba.homeoffice.gov.uk/sitecontent/applicationforms/pbs/tier1entrepreneurguidance1.pdf

Please rate my answer.

Kind regards,

Tom
Thomas, Lawyer
Category: UK Law
Satisfied Customers: 6309
Experience: BA (Hons), PgDip, Practising Solicitor
Thomas and 2 other UK Law Specialists are ready to help you
Customer: replied 1 year ago.
Dear Sir
Thanks for your reply, could you please suggest if we invest money in our consultancy company and through that we buy share of the retail company and our company becomes corporate director and gets dividend from that company , does this sound better than being director of retail
Company and issuing director loan ?
Along with being corporate director out company has already got contract from that retail company to provide them business management services so that will carry on ..

Thanks in anticipation
Expert:  Thomas replied 1 year ago.
Hi

Has the money not already been transferred?

Tom
Customer: replied 1 year ago.
No the money is still in our joint account .
Expert:  Thomas replied 1 year ago.
Hi

In theory that would be okay for most of the criteria excep tthe one where you are required to show that you have created jobs as a result of your investment.

If your investment company will remain as just you with no other employees then you would not meet this criteria and the extension application would be refused.

Tom
Customer: replied 1 year ago.
We will invest in company B to buy their shares or in form of director loan (Say we buy their share for £40000 & leave £10000 for our company A) so that remaining amount would be invested in service side of business and we will create employment in our company A ...

Otherwise if we just issue director loan to company B and become their director but not share holder , then we would be getting salary and interest , will this not just be a paid employment rather than investment ?
Expert:  Thomas replied 1 year ago.
Hi,

I'm afraid that I'm not confident on how this would be interpreted. It is the type of thing that would form the basis of an appeal and it would be imprudent of me to offer a view on that on less than the full information. For that, you would need to instrcut a solicitor in the normal way.

I am sorry.

Kind regards,

Tom
Customer: replied 1 year ago.
Thanks , I was bit confused about what is considered an investment .. We still
Have an offer to invest in a company but the only thing that was stopping me is how would we create jobs. Anyway thanks for your time. I would check it from accounting point of view because we are doing an investment of 50k so I don't want to take any chances

Thanks
Expert:  Thomas replied 1 year ago.
No problem and you're welcome.

Good luck.

Tom
Customer: replied 1 year ago.

Dear Mr. Tom ,


 


One final question , from PSW Route (50 k) on tier 1 entrepreneur visa , can we establish a retail business or does this has to be a graduate level business which is requirement for initial applicants ? I could not see this anywhere on Policy guidance, and there are different views and opinions about this ...


 


 

Expert:  Thomas replied 1 year ago.
I believe that if you comply with the requirements of D(iv) of the table on page 7 then you shoudl be okay:-
http://www.ukba.homeoffice.gov.uk/sitecontent/applicationforms/pbs/tier1entrepreneurguidance1.pdf

It is for you to decide if your plans do.
Customer: replied 1 year ago.

Hi Thomsan ,


 


After securing Tier 1 Entrepreneur visa, are we allowed to work as subcontractor (A contract between our company and anther company) , and can we work in our client's premises ?


 


Thanks in anticipation

Expert:  Thomas replied 1 year ago.
I'm afraid I have answered your original question now.

Tom

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