New Tier 1 rules – Innovators and Start-Ups

In its latest Statement of Changes to the Immigration Rules the Home Office has announced various changes to Tier 1 of the points-based system.

As previously indicated, the Tier 1 Entrepreneur and Tier 1 Graduate Entrepreneur visas are going to be abolished. The Tier 1 Entrepreneur route will be abolished on 28 March 2019 and no applications will be possible after that date. Two new visa schemes, the Start-Up visa and the Innovator visa, are being created and they will come into existence on 29 March 2019. They have at least some similarities with the two categories that are being abolished.

There will be transitional arrangements for those who already hold Tier 1 Entrepreneur and Tier 1 Graduate Entrepreneur visas, and some changes are being made to toughen up the rules for those on the Tier 1 Entrepreneur route.

And some changes are being made to the Tier 1 Investor visa rules.

Start-Up and Innovator Visas

These new visas, which are replacing the Tier 1 Graduate and Tier 1 Entrepreneur visa routes, will not be part of the points-based system and will therefore not be part of Tier 1. This is more of a bureaucratic concept than anything else, but we might as well get the nomenclature correct from the beginning.

The Start-Up visa is, well, for people who are starting up in business in the UK. It will be granted for two years and extension will not be possible, and it does not in itself offer a route to settlement. However, its terms are in some ways very liberal: anyone can apply, not just graduates, and there is no requirement for initial funding.

The Innovator visa, on the other hand, is purportedly for “more experienced” entrepreneurs. We take this to mean more experienced than Start-Up migrants, but a close look at the rules shows that they might be richer rather than necessarily more experienced. Like the old Tier 1 Entrepreneur route, it requires initial investment funds but the level of funds is, in every case, £50,000.

The visa is granted for three years and may be extendable. Settlement may be acquired after three years, if relevant criteria are met.

But here is the difficult part. Both Start-Up migrants and Innovator migrants must be endorsed by a Home Office-approved endorsing body. A list of such bodies has not yet been produced, but we hope and imagine that it will be by 29 March. The endorsement criteria are quite onerous. Not only must migrants be endorsed initially but the endorsement needs to be regularly reviewed. To put it another way, the endorsing body is required to keep tabs on the migrant’s business and assess its performance. If the performance is unsatisfactory then presumably the endorsement can be withdrawn.

But what are the criteria for endorsement? The Home Office says that the endorsing bodies will assess applicants’ business ideas for “innovation, viability and scalability”. Out of these three words we only fully understand “viability”. Of course, any proposed business has to be viable. We have some problems with “innovation” because not every business can offer a completely new product or a completely new service, and we note the Home Office’s significant words included in its definition of innovation: “creates a competitive advantage”, which seem to us typical criteria for assessing general viability.

And “scalability” had us desperately reaching for the dictionary. We suspect that what it means is that a business which might operate successfully on a very small scale must be such that, if it expands into a larger operation, it can still operate successfully. But it seems to us that the most important factor about this would be how well the business is managed, not how good the initial business idea is. Again, Home Office defining words offer some guidance: “evidence of structured planning and of potential for job creation and growth into national markets”. And, again, this would seem to us something that would relate strongly to general “viability”.

It seems that we may be swimming in rather deep waters here, and we will have to see how things work out in practice. No doubt the courts will get involved at some stage. But we are encouraged by the fact that the overall flavour of the Innovator scheme is relatively simple, and certainly so when compared with the Tier 1 Entrepreneur route, which is notoriously complex.

Changes to the Tier 1 Entrepreneur route

Those already on the Tier 1 Entrepreneur route will be able to continue with it if they wish to, but they will also be able to switch into the Innovator route.

Those staying on the Tier 1 Entrepreneur route and who apply for extension or settlement will now have to provide more details to prove that they are genuinely running the business: about the business activities, about themselves and about their employees.

Changes to the Tier 1 Investor route

Various changes are being made to toughen up the rules for new applicants. The requirement for applicants to have held investment funds for 90 days is being changed to a two-year requirement.

And applicants are already required to hold a UK bank account, and the UK banks are being placed under tighter requirements regarding due diligence checks.

And the possibility of investing into UK Government bonds is to be abolished. New applicants will only be able to invest in British companies.

Summary

There is a general tightening up of requirements. However, if the new Innovator scheme really does turn out to be a relatively simple one this will be a huge improvement on the Tier 1 Entrepreneur scheme which was, to say the least, very cumbersome.

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