New changes to the Tier 1 (Entrepreneur) route are set to come into force on 6 April 2014.
Currently applicants under this route must be able to demonstrate that they have, or have access to, either £200,000 or £50,000 (depending on their immigration circumstances at the time of the application) to invest in a UK business or businesses. One of the requirements for maintaining leave under Tier 1 (Entrepreneur) is that during the first three years, the applicant must ensure that the investment funds are spent on the business or businesses they are joining or establishing.
The Home Office is introducing new requirements in relation to how those funds can be spent.
An extremely high number of applications to extend leave to remain under this route are failing because the applicant cannot demonstrate that the investment funds have been spent in accordance with the requirements.
Spending the investment funds
Individuals with leave under Tier 1 (Entrepreneur) are currently prohibited from spending the investment funds on their own remuneration.
In addition, as from 6 April 2014, they will also need to ensure that the investment funds are not spent on:
- buying a business from a previous owner, where the money goes to that previous owner rather than into the business; and
- anything which is not directly for the purpose of establishing or running the applicant’s own business or businesses; and
- investing in businesses other than those which meet the requirements of Tier 1 (Entrepreneur).
Third parties
In order to secure initial leave under this route, the applicant can either use their own funds or they can rely on funds from third parties (individuals or companies).
Applicants seeking to rely on third party funds currently have to provide evidence from the financial institution that is holding the funds on behalf of the third party to confirm that the funds are available for the applicant’s business or businesses. Evidence from a lawyer confirming that the third party is making the funds available is also required.
Many financial institutions are unable or unwilling to provide such confirmation and therefore, as part of the new measures being introduced, the financial institution will need to confirm that the third party has confirmed the amount of money it intends to make available to the applicant and that the institution is not aware of the third party having promised to make that money available to any other person.
It remains to be seen if this change will make it easier for applicants to secure the evidence they need relating to third party funds.
In addition, the rules relating to the lawyer’s certification have been clarified and an independent lawyer must be instructed in relation to the third party declaration.
If it is at all possible for the funds to be transferred to the applicant’s personal bank account then we strongly recommend that this is done. This significantly reduces both the documentation that is then required for the application and the risk of refusal.
Some other minor changes are also being introduced and these include:
- Applicants can rely on money held in a joint account with their spouse or partner providing the spouse or partner is not another Tier 1 (Entrepreneur) Migrant.
- Applicants can rely on money invested in the UK in the 24 months prior to the date of application if they were last granted leave as a Tier 1 (Graduate Entrepreneur) Migrant.
- A minimum age requirement of 16 along with child protection measures for applicants aged under 18 are being introduced.
Our work with entrepreneurs and investors seeking to establish themselves in the UK is widely recognised and if you need legal assistance, please contact us.
