Can a Tier 1 (Investor) visa applicant rely on funds held in a business?
The Tier 1 Investor visa category is for high net worth individuals making a substantial financial investment in the UK. Under the Tier 1 (Investor) requirements, in order to qualify for an initial grant of leave in this category applicants must, amongst other requirements, have money of their own, under their own control, held in a regulated financial institution, and which is disposable in the UK, amounting to not less than £2 million. A question that we are often asked by our Tier 1 (Investor) clients is whether they can rely on funds that are held, not in their own personal bank account, but in a business bank account?
Can a Tier 1 (Investor) rely on funds held in a business?
Interestingly, the Immigration Rules are not immediately clear on this point.
Table 7 of Appendix A to the Immigration Rules states that the applicant will be awarded 75 points for attributes where he:
“(a) has money of his own under his control held in a regulated financial institution and disposable in the UK amounting to not less than £2 million; …”.
This provision makes clear that the applicant’s money must be ‘his own’ money and ‘under his control’, apparently ruling out the possibility of relying on funds that are held in a business bank account where, by definition, they would be under the control of a separate corporate entity.
However, paragraph 64A-SD of Appendix A to the Immigration Rules, which sets out the evidence required to prove source of funds where the applicant has had the money referred to in Table 7 for less than a consecutive 90-day period of time, clearly envisages investment funds being held in a business bank account.
Paragraph 64A-SD(v) states:
(v) If the funds are currently held in the applicant’s business (or the business of the applicant and/or the applicant’s husband, wife, civil partner, or unmarried or same-sex partner), the applicant must provide business accounts, which:
(1) are profit and loss accounts (or income and expenditure accounts if the organisation is not trading for profit),
(2) are prepared and signed off in accordance with statutory requirements, and
(3) clearly show the amount of money available for investment;
Paragraph 64A-SD(vi) continues:
(vi) If business accounts in (v) are provided, they must be accompanied by an original letter from a legal adviser who is permitted to practise in the country where business was operating, confirming that the applicant (or applicant and/or husband, wife, civil partner, or unmarried or same-sex partner) can lawfully extract the money from the business, which clearly shows:
(1) the name of the legal adviser who is confirming the details,
(2) the registration or authority of the legal adviser to practise legally in the country in which the business is operating,
(3) the date on which the details are confirmed, and
(4) that the applicant (or applicant and/or husband, wife, civil partner, or unmarried or same-sex partner) can lawfully extract the money from the business in question;
Similarly, the Tier 1 (Investor) policy guidance (version 04/17) confirms at page 25:
“If the money is or was held in your business (or that of your husband, wife, civil partner, or unmarried or same-sex partner), you must provide business accounts, plus confirmation from a legal adviser.”
These provisions clearly indicate that under the Immigration Rules, investment funds can be held in the applicant’s business (or the business of the applicant and/or the applicant’s husband, wife, civil partner, or unmarried or same-sex partner) at the date of application. The business must be the applicant’s business or the applicant’s partner’s business and the funds must both be reflected in the financial accounts of the company and be capable of being lawfully extracted from the business.
Source of funds v. Availability of funds
On the basis of paragraphs 64A-SD(v) and (vi) alone, it might be thought that a business owner seeking to apply for a Tier 1 (Investor) visa can therefore satisfy the requirements of the rules by simply producing company accounts which disclose a profit balance of at least £2 million. However, it is important to keep in mind that paragraphs 64A-SD(v) and (vi) set out the evidence that must be provided in order to prove source of funds where an applicant has not held their investment funds for 3 consecutive months. Distinct from the requirement to prove the source of the funds in such circumstances, the Immigration Rules also require all applicants to provide specified evidence to prove that they actually have the investment funds available to them. The importance of this distinction is made clear in the Tier 1 (Investor) policy guidance at paragraph 26:
“all applicants must provide a form of specified evidence listed in the Evidence of your investment funds – initial applications section of this guidance. This includes applicants relying on funding from a business, even if the money is still in that business. Applicants who only provide evidence of the source of funds will fall for refusal.”
And here is the catch for business owners. Paragraph 64-SD of Appendix A to the Immigration Rules provides an exhaustive list of documents which will be accepted by the Home Office as evidence of the availability of investment funds. This list of specified evidence, which applies to all Tier 1 (Investor) visa applications and not just those relying on funds held in a business, may be summarised as follows:
(1) A portfolio report or breakdown of investments in a letter produced by a UK regulated financial institution;
(2) Documentary evidence of holdings;
(3) Personal bank statements; or
(4) A Letter from a bank, which must confirm that the account is in the applicant’s name.
Since funds held in a business will not, by definition, be held in a personal bank account, it is axiomatic that in order to satisfy the specified evidence requirements of the Immigration Rules, funds held in a business must be held as an investment and this investment must be capable of being documented by either a portfolio report or letter from a UK regulated financial institution or documentary evidence of holdings. And, where the investment in the business is not managed by a UK regulated financial institution, as will often be the case where an applicant is applying for entry clearance as a Tier 1 (Investor), applicants will need to be in a position to provide documentary evidence of their holdings.
Documentary evidence of holdings
Paragraph 64-SD(ii) of Appendix A to the Immigration Rules provides an exhaustive list of acceptable documentary evidence of holdings. This states that the following will be accepted:
(1) certified copies of bond documents showing the value of the bonds, the date of purchase and the owner;
(2) share documents showing the value of the shares, the date of purchase and the owner,
(3) the latest audited annual accounts of the organisation in which the investment has been made, clearly showing the amount of money held in the investments, the name of the applicant (or applicant and/or husband, wife, civil partner, or unmarried or same-sex partner), and the date of investment, or, if no accounts have been produced, a certificate from an accountant showing the amount of money held in the investments, and
(4) original trust fund documents from a legal adviser showing the amount of money in the fund, the date that the money is available and the beneficial owner, and including the name and contact details of the legal adviser and at least one of the trustees;
From this list, it is clear that funds invested in a business by an applicant by way of corporate bonds, share capital, director’s loan or a commercial trust would all be accepted as ‘money of his own under his control’ for the purpose of Table 7 of Appendix A.
Concluding comments
To return to our original question therefore – can a Tier 1 (Investor) visa applicant rely on funds held in a business? The position under the Immigration Rules may be summarised as follows:
- Funds held in a business can be relied on by a Tier 1 (Investor) visa applicant;
- But, the funds held in a business must be held as an investment by the applicant or their partner – the cash profit of the business alone cannot be relied on;
- If the investment is managed by a UK regulated financial institution then a portfolio report or breakdown of investments in a letter from the financial institution must be provided;
- If the investment is not managed by a UK regulated financial institution then documentary evidence of the holdings must be provided;
- Only certified copies of bond documents, share documents, audited accounts, a certificate from an accountant showing the amount of money in the investment or original trust fund documents will be accepted as evidence of the investment holding;
- If the investment has been held for less than 90 days at the date of application then the funds must be reflected in the financial accounts of the company and a legal adviser will need to confirm that the funds are capable of being lawfully extracted from the business.
There is also one other provision of the rules that Tier 1 (Investor) visa applicants seeking to rely on funds held as an overseas business investment should be mindful of. As noted above, Table 7 of Appendix A to the Immigration Rules requires that the funds must be ‘disposable in the UK’. Paragraph 64-SD(b) of Appendix A gives effect to this requirement by stipulating that if the funds are not held in the UK, the applicant must also provide an original letter from a bank or financial institution that is regulated by the official regulatory body for the country in which the institution operates and the funds are located, on the institution’s official headed paper, issued by an authorised official of that institution, which confirms, amongst other matters, that the applicant is the beneficial owner and that the money can be transferred to the UK.
