2015 Review: The Tier 1 (Entrepreneur) Category

By Gillian McCall - Barrister Partner

18 Dec 2015

2015 has been a year of big changes in the field of immigration law. With the bringing into force of the Immigration Act 2014 significantly affecting rights of appeal, the introduction of the Immigration Health Surcharge, roll out of BRPs for Entry Clearance, a substantial restructuring of the Visitor category and a series of reported decisions interpreting Article 8 in ways that are not entirely consistent – it is safe to say that it has not been a quiet year.

In this article we will look specifically at how the Tier 1 Entrepreneur category has fared this year.

The Big Changes

There have been three incidents of changes to the Entrepreneur rules in 2015. The biggest was the change that came in April 2015. Most of the changes can be categorised as ‘tidying up’ or ‘clarification’ of the rules, although in some cases individuals affected by minor clarifications may see these as rather more substantial changes. The next change came on 1 September 2015 with the introduction of the criminal records check, and then final changes on 19 November 2015.

The changes with the biggest effects include:

• Genuine Entrepreneur test introduced at extension and settlement stages;
• Business plans being made mandatory at the initial application stage;
• Funds need to be held for 90 days before making an application, unless evidence is provided to show a gift;
• Applicants switching from Tier 1 General and relying on £200,000 of their own funds need to demonstrate that they have been working continuously since before 6 April 2015;
• Criminal Records Check introduced for Entry Clearance applications;
• Genuine Entrepreneur test extended for initial applications to include the genuineness of any investment already made.

‘Clarifications’ that entrepreneurs may want to keep in mind include:

• The prohibition on investing into other businesses, does not include other businesses in which the migrant is running the business as self-employed or as the director;
• Money used to purchase a business from a previous owner will not count as being invested into the business. This includes money channelled through the business to the previous owner;
• Property management and property development have been further defined to state that income should not be derived from the increase in the value or rent from a property, but instead from supply of goods and services.

The Statistics

The latest Quarterly Immigration Statistics show that there were 444 Tier 1 Entrepreneur Entry Clearance applications between July and September 2015. For the second quarter running less than 50% of these applications were successful, although the refusal rate has dropped from 57% to 51%. The number of applications submitted continues to fall.

There is a similar trend for extension applications from within the UK. Between July and September 2015 the refusal rate is around 55%. The number of applications has risen slightly since the last quarter but is less than half what it was this time last year. This may be due to the closure of the Tier 1 (Post Study Work) category, meaning that there are less people within the UK switching to Entrepreneur.

The tables show that in the whole of 2014, of the applications made in the UK to extend leave in the Tier 1 (Entrepreneur) category, 3690 were Post Study Work migrants switching into the category and 249 were Tier 4 (General) students who switched.

The tables also show what entrepreneurs do, if they don’t remain Entrepreneurs. For example, in 2014, while 203 extended their stay as Entrepreneurs, 51 switched into Tier 2 general and 51 extended leave on the basis of a partner in the UK.

The latest statistical release also has information about where our Entrepreneurs have come from for the year 2014.

Unfortunately, the same statistics aren’t available for Entry Clearance.

The Reported Cases

There have been seven reported cases on the Entrepreneur category in 2015. This includes both appeals and Judicial Review decisions. The majority of these relate to the points scoring requirements, while only two focus on genuineness, despite the majority of applications being refused on the basis that an applicant is not a genuine entrepreneur.

Points Based Requirements

• Nandi, R (On the Application Of) v Secretary of State for the Home Department [2015] EWHC 2702 (Admin)
• Iqbal & Dependants v Secretary of State for the Home Department [2015] EWCA Civ 169
• Sabir & Ors, R (on the application of) & Anor v The Secretary of State for the Home Department [2015] EWHC 264 (Admin)
• R (on the application of Imran Idris) v The Secretary of State for the Home Department IJR [2015] UKUT 00095 (IAC)
• R (on the application of Zia and Another) v Secretary of State for the Home Department IJR [2015] UKUT 00191 (IAC)

Genuineness

• R (on the application of Zhang) v Secretary of State for the Home Department IJR [2015] UKUT 00138 (IAC)
• Olatunde v Secretary of State for the Home Department [2015] EWCA Civ 670

The MAC Review

Another big development from 2015 is the Migration Advisory Committee’s review of the Entrepreneur category.

The Migration Advisory Committee (MAC) released its long awaited report proposing changes to the Tier 1 (Entrepreneur) category on29 October 2015 and it has made a number of recommendations for changes to the category.  Changes, although it is not yet clear in what form, are expected to come in April 2016.

Some of the key recommendations included:

• Make more use of third party endorsements including UKTI, government departments, accelerators, angel investors in conjunction with the UK Business Angel Association. Where endorsement is provided, to remove the genuine entrepreneur test and reduce the investment threshold;
• Consider alternative means of assessing genuineness including a panel of experts, recruitment of specialised immigration officers, assistance from the UKTI or BIS, outsourcing to professional firms;
• Encourage or require innovative businesses;
• Interim monitoring requirements;
• Minimum investment threshold to be applied per team member rather than being shared.

Richmond Chambers Cases

We are delighted to have helped so many Entrepreneurs throughout 2015 from their initial visits to the UK, through to their settlement decisions. We have helped with investments into new start-ups and more established businesses in technology, environment, fashion, teaching, music, design, and hospitality. It is always great to hear from previous clients who are establishing further businesses or creating new jobs in the UK. You can read about our success stories here.

Further Reading

Members of the Richmond Chambers Entrepreneur Team frequently post articles about the Tier 1 Entrepreneur category. Please see links below to some of our most popular Entrepreneur articles this year:

• Our top 10 tips for a Tier 1 Entrepreneur extension application
• Brewster’s £200,000: Spending your Tier 1 (Entrepreneur) Investment Funds
• Criminal Record Checks for Investors and Entrepreneurs in Practice
• Entrepreneur Extension Applications: Genuine Entrepreneur Test
• Tier 1 Entrepreneur: Working and Contracts for Services
• Home Office announces important changes to the Tier 1 (Entrepreneur) visa category
• UK Entrepreneur Visa: The Job Creation Requirement