UK immigration announces changes to Tier 1 (Entrepreneur) route

The UK's immigration minister James Brokenshire has published an announcement of changes to the Tier 1 (Entrepreneur) visa. He released the document on 10th July 2014. The changes came into force on 11th July.

Mr Brokenshire said that the Home Office had uncovered evidence that the Tier 1 (Entrepreneur) visa stream had been targeted by fraudsters, particularly since the closure of the Tier 1 (Post Study Work) visa was closed in 2012.

By examining tax records, the government has uncovered evidence that some foreign nationals in the UK with Tier 4 (Student) visas had transferred to the Tier 1 (Entrepreneur) visa were working for someone else and not in fact running their own businesses.

Bogus business plans

The Government says that some students created bogus business plans. Also, in reality they did not meet the investment requirements to qualify for a Tier 1 Entrepreneur visa.

Therefore, Mr Brokenshire announced;

  • From now on, students will only be able to transfer from Tier 4 to Tier 1 (Entrepreneur) visas if they can show that their qualifying investment funding comes from a 'government approved source'. Funding can no longer be provided by a venture capitalist. It must now come from
    • Seed funding companies endorsed by UK Trade and Investment or
    • UK government departments (including departments of the Welsh, Scottish or Northern Irish governments)
  • People transferring from Tier 1 (Post Study Work) to Tier 1 (Entrepreneur) visas will only be able to transfer to the Tier 1 (Entrepreneur) visa in two circumstances'
    • if they can show that their qualifying investment funding comes from a 'government approved source'. Funding can no longer be provided by a venture capitalist. It must now come from
      • Seed funding companies endorsed by UK Trade and Investment or
      • UK government departments (including departments of the Welsh, Scottish or Northern Irish governments) or
    • If they have funding from any source but can show that they have already established a 'genuine business' which is 'not de facto employment with another employer' and 'are working in a skilled occupation'. The business must have been established before 11th July 2014.

Must be 'working for their own business'

The rules have also been amended to clarify the fact that Tier 1 (Entrepreneur) applicants must be 'working only for their own business. A clarification is being made to confirm that this means they cannot claim to be self-employed yet work in a de facto employment relationship with another employer'.

In addition,

  • Where the funding is granted to a company, rather than to an entrepreneur in person, the Tier 1 (Entrepreneur) visa applicant must be registered as a director of that company on the companies register held at Companies House
  • Where evidence of a business bank account is requested by UK Visas and Immigration, the Tier 1 (Entrepreneur) visa applicant must be a signatory to that account.
Normally, the Home Office will give 21 days' notice of changes to the immigration rules. On this occasion the changes have been introduced immediately to prevent a spike in applications before the new rules are introduced.

3,000 applications

The Home Office says that, when 21 days' notice of impending changes were given in December 2012, 3,000 applications were made in the notice period under the old rules'.

The Tier 1 (Post Study Work) visa stream was closed in 2012. It allowed foreign students who graduated from UK universities to remain in the UK for two years after graduation. They were allowed to work for any employer (there was no need for employers to be licenced sponsors). They were allowed to set up businesses and be self-employed.

If they had obtained a job with a licenced sponsor during the two year period, they were then allowed to apply for a Tier 2 (General) visa.

Tier 1 (Post Study Work) visa

This stream was closed in 2012 as part of the Coalition government's efforts to reduce net immigration into the UK to below 100,000 by 2015. As the visa lasted for two years, some Tier 1 (Post Study Work) visas issued before the closure of the stream will still be valid.

The Tier 1 (Entrepreneur) visa is designed to allow non-European foreign nationals to set up businesses in the UK. Applicants must normally show that they have £200,000 to invest in a start-up business. This money could be their own or advanced to them by an investor.

Applicants transferring from the Tier 1 (Post Study Work) stream were only required to show that they had £50,000 in investment capital.

Points-based test

Applicants had to score 95 points on the Tier 1 (Entrepreneur) points-based test. To do this they had to show that
  • They had at least the minimum investment capital required – 25 points
  • That these funds were held in a regulated financial institution -25 points
  • That these funds are ready to be used and in the UK – 25 points
  • They are proficient in English to the required level – 10 points
  • They have sufficient funds to support themselves in the UK – 10 points (in addition to the investment capital).

In January 2013, the previous immigration minister, Mark Harper MP, announced changes to the Tier 1 (Entrepreneur) visa. Mr Harper said 'There is strong evidence to suggest that funds to prove eligibility are being re-cycled amongst different applicants and that artificial businesses are being created'.

New rules in January 2013

He introduced new rules, which came into force on 31st January 2013, which required immigration staff to make checks on the following before issuing an Entrepreneur visa.
  • 'The viability and credibility of the source of the money' which the applicant has claimed to have.
  • The viability and credibility of the applicant's business plans.
  • The applicant's previous business experience and education
  • The applicant's immigration history and
  • Any other relevant information.

Mr Harper also announced that checks would be made after the visa was granted to ensure that the business was genuine and the funds remained available.

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