CHANGES TO IMMIGRATION RULES – TIER 1 (ENTREPRENEUR) CATEGORY

 

On 10th July 2014, The Home Office announced changes to the Tier 1 (Entrepreneur) category. Immigration minister James Brokenshire said the changes had become necessary because of visa fraud. The Statement of Changes HC532 states “…the changes… will have limited or no impact on genuine small businesses which are already established.”

 

The changes are mainly targeted at students. The reality being that after graduation, most people only have limited leave remaining: four months is permitted from the end of your course. So you have even less time in most cases to make job applications.

 

As a student, you will have applied for jobs and attended interviews prior to the end of your course. After sitting final exams, the award of the degree certificate can take three months or more and employers will only give final confirmation of a job offer on sight of the same. It is almost impossible to find a large employer willing to sponsor a Tier 4 candidate and pay a graduate salary when you have literally no leave remaining. This leaves self-employment as an entrepreneur as the only option for many.

 

THE NEW RULES

From now on, Tier 4 visa holders will only be able to transfer to the Entrepreneur visa if they have acquired at least £50,000 in investment from a ‘government-approved source’. If you are a Tier 4 migrant “without funding from a seed funding competition or UK/devolved government department you are not permitted to switch into the Tier1 (Entrepreneur) category.”

 

Very few people meet these requirements at present and we think very few will do so in future.

 

People transferring from Tier 1 (Post Study Work) will only be able to transfer if they have funding from a government-approved source as from 11th July 2014 (but not from a Venture Capital firm.) Or they can show that they had already established a genuine business before 11th July 2014 and then apply to switch into Tier 1 (Entrepreneur).

 

(Since PSW closed in April 2012, there will now be very few people left to apply from this category.)

 

This ties in with the “Genuine Entrepreneur test” introduced in January 2013. At that time it related mainly to the funds used to support the application. Now it can be used to ask further questions about any aspect of your business. Applicants must demonstrate that they comply with the purpose of the visa – that is to be engaged in entrepreneurial activity and work that is above NQF4. The Policy Guidance refers prospective candidates to the Codes of Practice in Appendix J of the Immigration Rules for example any work that involves administration, marketing or website functions for the business is excluded. If your business plan involves importing luxury goods from Italy for your web-based business and you cannot speak Italian, expect to be questioned further!

 

The key point is that the funds must remain available to you or “until they have been spent for the purposes of your business…” This specifically excludes spending on

  1. remunerating yourself. The Policy Guidance is very clear this is prohibited.
  2. Buying the business where the money goes to the previous owner rather than into the business.
  3. Nor can you invest in other businesses and
  4. Any spending which is not directly for the purpose of establishing or running your business.

Otherwise, the Home Office will want to see the funds are still available to the business and require bank statements to show incomings and out-goings. Invoices will almost certainly have to be produced as evidence of investment and business purchases.

 

The Home Office conducts checks with HMRC to see if applicants’ tax records are reasonably those of a self-employed entrepreneur or company director. If your tax history is inconsistent with the aforementioned, the Home Office will make further checks requesting more evidence and including further interviews. The new requirement is that applicants must have “been continuously (1) registered with HMRC as self-employed, or (2) registered with Companies House as a director of a new or an existing business.”

 

Applicants may still qualify if they can raise £200,000 in investment capital. The restrictions imposed by the “Genuine Entrepreneur test” will still apply in this case as the Guidance does not distinguish between those with £50,000-00 or £200,000-00 of capital to invest.

 

English language and Maintenance;- TOIEC and TOEFL are no longer accepted. The Maintenance requirement has increased to £945-00 (and £630-00 for dependants.)

 

At One Immigration, part of our advice includes making sure you instruct an accountant, have a business plan ready, set up a business bank account and be able to demonstrate some solid market research. This all goes to the issue of credibility and meeting the genuine entrepreneur test whether you are a Tier 4 migrant, switching from Tier 1 (Post Study Work) or are applying from overseas with your own capital.

 

One Immigration August 2014.

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