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frantzgregory, Lawyer
Category: Immigration Law
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Experience:  Over 5 years dealing with EEA Law, Nationality, Immigration and Asylum Law.
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I'm a director of a limited company and got 5 partners

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I'm a director of a limited company and got 5 partners on Tier 1 Entrepreneur visas. We are currently running a restaurant business. My question is: We want to buy an existing business (a restaurant in London) so we will pay a premium for the current lease holder and will pay a rent security deposit to the landlord to replace his deposit. Would that count in the 200k investment that each of them should be doing in the first 3 years of their visas? Kindly note that the lease that we want to take over is to 3 years left but it's secured and renewable lease (inside the act 1954). Also please note that this business is a running business. If yes it does count in the investment, what's the best procedure to buy out this business?
Thank you for your enquiry.
Please note that when an initial application for a Tier 1 (Entrepreneur) visa is made, points are awarded on the basis of access to funds with the condition that funds must continue to be available to you until they are invested in a business or businesses, or spent for the purposes of your business or businesses.
According to the guideline ‘invested’ or ‘spent’ by your business’ excludes spending on all of
the following:
"1) your own remuneration,
2) buying the business from a previous owner, where the money ultimately goes to that previous owner (irrespective of whether it is received or held directly or indirectly by that previous owner) rather than into the business you have bought. This applies regardless of whether the money is channelled through the business en route to the previous owner. For example, by means of you or your business
purchasing ‘goodwill’ or other assets which were previously part of the business you have bought,
3) investing in businesses,other than those which you are running as self-employed or as a director, and
4) any spending which is not directly for the purpose of establishing or running your own business or businesses."
Please note that money for investment can be shared by a team of a maximum of two entrepreneurs.
I hope this clarifies your questions.
Customer: replied 2 years ago.
Hi, thank you for the response. I need more clarification please. My partners are applying for extension of their visas in 6 months. We are already running a business at the moment but didn't spend the 200k in investment yet. Now we have an opportunity to take over a running business (another restaurant) which we should pay a premium for the previous owner, replace the deposit that he paid to his landlord and then invest more money to renovate that restaurant. We will buy that business for 150k would this money count in the investment for the teir 1 entrepreneur partners and they can use it for the purpose of extension of their language? Kindly clarify in simple vocab to be able to make a full understanding about your answer :)
If the answer is NO
can they just deposit the rest of the 200k each in the company bank account or this will make a problem for them when they are due for their extension?
Thanks for your patience.
Your investment should go into the business. Buying a business from a previous owner where the money is paid to the previous business owner does not count as investment.
For subsequent applications, a migrant who has or was last granted leave as a Tier 1 (Entrepreneur) must show that they have invested not less than £200,000 in cash directly into the business. An applicant must score all of the points required to be granted further leave. No point is awarded for depositing £200,000 in the company bank account.
Customer: replied 2 years ago.
Hi and thanks for your response and extreme kindness.
Just a little clarification about depositing the money into the company bank account. My understanding from the policy thatchy can deposit the rest of the money at the company account in the form of a director loan.
The wording of the policy is as follows:
Director’s loanIf you have made the investment in the form of a director’s loan, it must be shown in both the relevant set of financial accounts provided and through readily identifiable transactions in the applicant’s business bank statement(s). The statement(s) must clearly show the transfer of this money from you to your business. You must also provide a legal agreement, between you (in the name that appears on your application for leave) and the company.
This agreement must show:
 the terms of the loan;
any interest that is payable;
 the period of the loan; and
 that the loan is unsecured and subordinated in favour of third-party creditors.
If it is not clear from the information provided that the loan is unsecured and subordinated in favour of third-party creditors, we will not accept the loan for the award of points.Under this policy can they give the company the rest of their money under director's loan with an agreement between them and the company?
Thanks for your patience.
My understanding is that your question relates to an extension application. If this is a case of an extension application, the amount of money invested should not be in a form of a director's loan unless it is unsecured and is subordinated in favour of a third-party creditor e.g. a director takes an unsecured loan from a third-party creditor to invest in the business and the loan is not secured against property or assets.
If you have made an investment with a director's loan, the transactions must show up in the business bank statements and financial documents. Please note that third-party creditors are those the business owes money to and not including you.
I hope this helps.
Customer: replied 2 years ago.
Is this means that the directors (partners in the company who are on Entrepreneur visa can transfer their money to the company account and make an agreement with the company that they gave this money to the company on loan to cover any possible creditors of the company ?
Is my understanding correct?
Customer: replied 2 years ago.
Kindly note that I did read the guide but I don't understand it this is why I'm asking you.
Thanks for your patience
Your understanding is incorrect.
Think of this as an example. A director can only borrow money from somebody else (a third-party creditor) to use in the business. Third-party creditors are those the business owes money to and not including you or the directors on the Tier 1 (E) visa.
I understand. Your questions are valid ones in such complex area of the Rules.
I hope this is clearer.
Customer: replied 2 years ago.
thank you very much Frantz, this clarifies everything.
You are welcome.
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Customer: replied 2 years ago.
will do