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Tier 1 Entrepreneur – why is good to invest in the UK?
From an immigration point of view, it's undeniable that it makes perfect sense for a foreign investor to enter the UK under the newly revised Tier 1 Entrepreneur category rather than the Tier 1 Investor due to the lower level of funds required.
On 6 April 2011, the Statement of Changes (863) significantly amended the requirements listed under paragraph 245(DB) of the Immigration Rules. In brief, to qualify under the Tier 1 Entrepreneur Scheme, the prospective applicant will need to claim 75 points under Appendix A as well as satisfy the English language and the maintenance requirements.
Once successful, an entry clearance is granted for 3 years and four months and the applicant will be able to be joined by his/her dependants as well as extend his leave in country for further two years. However, there are certain restrictions, most significantly no employment other than working for the business the applicant has established, joined or taken over in the UK.
We have assisted many applicants and in our experience, we have noted some common misunderstandings and mistakes which might sadly lead to a refusal, but can as easily avoided when the mandatory documents are properly put together.
As mentioned, an applicant must have a minimum of 75 points under paragraph 35-53 of Appendix A. In terms of investment, 25 points can be claimed by either showing that the applicant has access to no less than £200,000, or the applicant has access to no less than £50K from a registered ventured capitalist firms regulated by the Financial Services Authority (FSA), a UK Entrepreneurial seed funding competition which is endorsed on the UK Trade and Investment website or one or more UK Government Departments dealing with new business ventures.
The remaining 50 points can be claimed by providing the necessary evidence to show that the money is held in one or regulated financial institutions (25 points) and that the funds are freely disposable in the UK (25 points).
In some cases, an applicant might have already legally established a business in the UK and as such made an investment in the company. It is therefore important to have a full understanding of the applicant's immigration history and financial records as the UK Border Agency will accept, if adequately documented, an investment made within the 12 calendar months before the date of application. Again, one has to be very accurate as to what the UK Border Agency understands as to the "date of application"
Also, often an applicant may wish to rely shares or assets in a company to claim the required 25 points. However, these can be used only once converted to money. If the money is held in different financial institutions, they must ALL be regulated by the FSA or the equivalent home regulator and must provide evidence of this. In our experience, the UK Border Agency will always access the FSA register and for overseas companies not registered with the FSA, they will contact the International Organization of Securities Commissions (IOSCO) or check the list of central banks on the Bank for International Settlements website.
It is also important to point out that the fact that financial institutions are trading on the stock markets will not be accepted as a guarantee that it is properly regulated.
Finally, the investment must be made within 6 months from the date of entry in the UK. However, there also specific requirements as to the type of investment which will be accepted by the UK Border Agency. For instance, the investment should not be in the form of a Director's loan unless it is unsecured and subordinated in favour of third party creditors. Investment in property development and managements will not be considered for points. Also, not all businesses will be accepted for the purpose of a Tier 1 Entrepreneur application. Thus, it is essential for the business to be a registered UK office, a UK bank account and subject to UK taxation.
However, as an added incentive, successful entrepreneurs who create 10 jobs for resident workers or have a turnover of £5 million will be able to qualify for settlement on completion of 3 years in the UK.
Further, the UK Government recognises that business people and entrepreneurs might be discouraged by the strict residence criteria for settlement whereby migrants are expected to spend 9 out of 12 months in the UK. The rules have now been relaxed to allow maximum absences of up to 180 days per year.
Finally, there will be a new visitor visa category, the "Prospective Entrepreneur"