1

Tier 1 (Entrepreneur) route in HC 535--clarifying the rules

11/11/2015

Immigration analysis: What are the effects of the changes to the Tier 1 (Entrepreneur) route in HC 535? Mikhail Adam, a business immigration solicitor at Smithfield Partners, summarises the changes and notes that, while they are primarily minor and technical in nature, they do bring clarity on some issues.

Original news

UKVI announces changes to Immigration Rules, LNB News 29/10/2015 106

Changes to the Immigration Rules were announced on 29 October 2015. The changes affect the areas of asylum, settlement, family and private life, and Tiers 1, 2 and 5 of the points-based system. Most of the changes will affect all applications submitted on or after 19 November 2015 unless otherwise stated.

What changes were made to the Tier 1 (Entrepreneur) route in HC 535?

Minor and technical changes have been made to the evidential requirements for entrepreneurs. These include:

o when an applicant invests by way of a director's loan, the applicant should not only provide evidence of a legal agreement between the applicant and the company, but should also submit financial accounts that show the director's loan by readily identifiable transactions in the applicant's business bank statements

o under the existing Rules, where an applicant has invested by way of share capital, the applicant must submit business accounts that show the shareholders, the amount, and the value of the shares. Now, where the value of the applicant's share capital is not shown in the accounts, then a copy of the company's register of members must also be provided--this is a new requirement, previously the obligation was to simply submit the relevant share certificates

o the genuine entrepreneur test for initial applications has been clarified so that the Secretary of State can now make an assessment of any previous investment made by an applicant into a UK business, which is being relied on to score points, in order to be satisfied that this investment was made into a genuine UK business

o confirmation that the previous restriction on applicants investing in other businesses does not apply to businesses which the applicant is running as self-employed or as a director

o changes to the additional evidence required for continuous trading if an applicant is applying for leave to remain, and has, or, was last granted leave as a Tier 1 (General) migrant or Tier 1 (Post-study work) migrant

o the removal of the requirement for applicants with third party funds from a UK government department or an approved seed fund to provide additional legal documentation, plus the addition of certain relevant details to be provided in the specified evidence to confirm where the money is coming from

o clarifying and bringing in more flexibility as regards the evidence that applicants must provide to demonstrate they have created jobs at extension stage--for example, applicants can provide form P35 if the business started employing staff for which points are being claimed before they were reporting PAYE details to HM Revenue & Customs under the Real Time system

o the Association of Accounting Technicians (AAT) has been added to the list of UK accounting bodies whose evidence is accepted in various Tier 1 categories

What prompted these changes?

The Explanatory Memorandum states that these changes were in response to 'feedback received and to prevent abuse'.

It is important to be aware that, separately, the Migration Advisory Committee (MAC) published a critical report in September 2015, which concluded that the entrepreneur route had 'a long tail of low quality projects which contributed little or nothing to UK plc.' The MAC has suggested major reform of this route and it is to be seen whether these are subsequently incorporated into the Immigration Rules.

2

How will they work in practice?

The changes will necessitate better quality evidence of business activity being presented to the Home Office. They should also bring some certainty to applicants on various issues. Changes to the genuine entrepreneur test may cause difficulty, as the Home Office will now look at any or all previous investments in UK businesses that are being relied on for initial applications, in order to ascertain an applicant's genuineness.

Will any of the changes require further clarification?

The changes do not clarify the position with regard to third party funding by, for example, angel investors or crowd funding. These can be key providers of investment in early stages of a business. The Home Office needs to consider the feasibility of approving selected angel investor networks or syndicates to provide third party endorsement under the entrepreneur route. This is a MAC recommendation too.

The genuine entrepreneur test also needs to be refined. The assessment should consider viability, scalability and innovativeness of the business proposal as well as the credibility of the individual, with an emphasis on skills, aptitude and business experience (another MAC recommendation). In my view, the business plans should also be assessed by industry experts and not civil servants.

Interviewed by Ioan Marc Jones.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor

About LexisNexis | Terms & Conditions | Privacy & Cookies Policy Copyright © 2015 LexisNexis. All rights reserved.