Can I be a contractor if I have leave as a Tier 1 Entrepreneur?
Successful Tier 1 (Entrepreneur) applicants will have their leave granted subject to a number of conditions. One of these conditions is that you cannot work for a business other than your own. The condition states:
‘no employment other than working for the business(es) the applicant has established, joined or taken over, but working for such business(es) does not include anything undertaken by the applicant pursuant to a contract of service or apprenticeship, whether express or implied and whether oral or written, with another business’
In this article we will look at what this condition means for those who are contracting, and what entrepreneurs will need to do to avoid their leave being curtailed or their extension applications being refused.
What exactly is permitted and what is not permitted?
The Tier 1 (Entrepreneur) policy guidance explains that you can work as a director of your own business or under a contract of service in genuinely self-employed capacity. What is prohibited, however, is work on a self-employed basis which effectively amounts to employment by another business. The Tier 1 (Entrepreneur) modernised guidance states:
‘For example, where the migrant’s work involves the business, in effect, hiring them for their labour or to fill a position or vacancy. This includes where the business hires the individual using a recruitment or employment agency.’
This will apply whether or not you call yourself self-employed; the Home Office will look at the actual factual basis of the work that you are doing. The Home Office guidance on checking employment status previously referred to the HMRC guidance, however, more recent updates (in both policy guidance and the modernised guidance for caseworkers) contain a list of factors to be considered. These are similar, though not identical, to those to be considered by HMRC, which could potentially give rise to different decisions as to employment status by HMRC and the Home Office. Applicants should be aware that these factors are contained in guidance only and are not set out in the immigration rules. The factors that they will consider include:
- whether the applicant is in business for themselves and is responsible for the success or failure of that business and it can make either a profit or a loss
- whether the applicant can decide what work they do and when, where or how they do it
- whether the applicant can hire someone else to do the work
- whether the applicant is responsible for fixing any unsatisfactory work in their own time
- whether the applicant agrees a fixed price for the work – it does not depend on how long it takes to finish
- whether the applicant uses their own money to buy business assets, cover running costs and provide tools and equipment for their own work
- whether the applicant can work for more than one client
- whether the applicant can put in bids or give quotes to get work
- whether the applicant is under direct supervision when working
- whether the applicant submits invoices for the work they have done
- whether the applicant is responsible for their own National Insurance and tax
- whether the applicant gets holiday or sick pay when they are not working
- whether the applicant operates under a contract for services or consultancy agreement that uses terms like ‘self-employed’, ‘consultant’ or an ‘independent contractor’
Therefore, while it is possible to be a self-employed contractor as a Tier 1 (Entrepreneur) migrant, you must be very careful to ensure that you are genuinely self-employed and your work doesn’t amount to employment by another company.
What are the consequences of getting it wrong?
If you are found to have fallen foul of these rules you will have been in breach of your conditions. This provides a discretionary ground for refusal or curtailment of your leave. This means that normally leave will be curtailed or an extension application will be refused, however, it is not mandatory. You should therefore avoid circumstances where you may be found to have breached your conditions. This ground for refusal could apply even if you apply to switch into a different category of the rules, for example switching into Tier 2 or applying to settle under the Long Residence rules.
How can I protect myself?
It will be helpful when it comes to make your extension application to have paperwork for all the work that you have completed, including any contracts for service, invoices, receipts, and evidence of how your business has been running in practice. In the event that your application was refused on this basis, or if leave were to be curtailed, the potential remedy is Administrative Review and Judicial Review, where new evidence can only be submitted in limited circumstances. Therefore in making an application, it can be helpful to pre-emptively address potential issues with evidence of how you do meet the requirements of the immigration rules.
Contact our Entrepreneur Immigration Lawyers
For advice about extending your stay in the UK as a Tier 1 (Entrepreneur) or for ongoing advice and support throughout your period of leave as a Tier 1 (Entrepreneur) please email Gillian McCall. Alternatively, you can reach our immigration barristers on 0203 617 9173 or via our enquiry form.