The Tier 1 (Entrepreneur) route is open to non-EEA nationals who wish to invest in one or more businesses in the UK. Currently, applicants must evidence that they have at least £200,000 to invest in a UK business, however in some circumstances this investment threshold is lowered to £50,000.
In March 2015 the Migration Advisory Committee (MAC) was commissioned by the Government to review the Tier 1 (Entrepreneur) and (Graduate Entrepreneur) routes.
The MAC was asked to consider:
- the initial eligibility criteria of access to funds as a sufficient factor of entrepreneurial ability and whether other criteria, for example, assessment of previous entrepreneurial activity and/or testing the purpose of the investment, should be applied;
- whether the existing eligibility and extension criteria are aligned sufficiently with entrepreneurial and early stage business life-cycles, including consideration of the role angel investors and crowd-funding can play;
- the route utilising international best practice-the MAC was requested to consider the route and incentives to ensure competitiveness.
The report, which was published on 29 October 2015, detailed that there was evidence to suggest migrant entrepreneurs have the potential to contribute directly and indirectly to economic growth in the UK as well as generating employment and business activities. Additionally, the impact of migrant entrepreneurs was found to spread deeper into the economy, potentially influencing and facilitating knowledge transfers, innovation, competition and productivity.
In particular, the MAC recommended the Government:
- to consider explicitly emphasising that the route aims to attract innovative entrepreneurs;
- to seek to make greater use of third party endorsement including the creation of 'Start-up visas' in collaboration with UKTI-approved accelerators as well as endorsement from a small number of angel investor networks or syndicates alongside FCA regulated venture capital funds;
- to work with UKTI and UKBAA to explore the possibility of approving angel investor networks or syndicates to provide third party endorsement under the Tier 1 (Entrepreneur) route;
- to allow Tier 1 (Graduate Entrepreneurs) and Start-up entrepreneurs to switch into Tier 1 (Entrepreneur) if they already meet the extension criteria;
- to examine alternative delivery options for the genuine entrepreneur test to make the category more selective. For example the MAC suggested a panel of industry experts, specialist and qualified immigration officers, UKTI or BIS or a professional business services firm could review applicants' business plans. Although the MAC also highlighted that the Government would need to make clear that the aim behind the genuineness test is to assess the 'viability, scalability and innovativeness' of the business proposal;
- to introduce a broader emphasis on individual skills, qualifications and background as investors typically place more emphasis on the merits of the individual entrepreneur or team ahead of the business plan;
- to consider setting the lower investment threshold in the range of £40,000 to £50,000 to reflect low start-up funding in some highly innovative sectors;
- to consider that some migrants have been found to be using the Entrepreneur category as a 'low cost' alternative to the Tier 1 (Investor) route and whether this should be restricted, given that it does appear to be economically beneficial for UK businesses but is arguably not the intended purpose of the Tier 1 (Entrepreneur) category;
- to introduce interim monitoring measures which may be aligned to other standard reporting requirements, such as HMRC tax returns and extension applications could be make conditional on interim progress updated being submitted;
- to reassess the inflexible criteria for extension applications and set out a new range of alternative measures that could indicate business progress. For example, the MAC suggested including turnover and investment raised as well as employment created;
- to consider whether to allow discretion to be exercised for migrant entrepreneurs whose businesses have failed to still be eligible for extension. For example where the migrant entrepreneur can demonstrate significant, credible investor support for a new venture;
- to implement the requirement that the minimum investment thresholds be applied per main applicant in an entrepreneurial team;
- to extend the initial grant of leave to remain under Tier 1 (Graduate Entrepreneur) from one year to two years;
- to recognise that the current 180 days absence rule can be detrimental to business activities and to consider allowing more flexibility in cases where clear business reasons can be given for absences over the limit; and
- to allow migrant entrepreneurs to have their applications processed under 'premium visa service' in return for a higher fee, as the MAC received feedback that the majority of Tier 1 (Entrepreneur) migrants expressed an interest in such a service.
Please note, the Government has not yet implemented any of the MAC's recommendations to the Tier 1 (Entrepreneur) or (Graduate Entrepreneur) categories.
If any of these changes are implemented into the Immigration Rules in the future and shall affect your application, your Client Care Manager shall advise you of this at the relevant time.