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New blog post: Changes to the Tier 1 Entrepreneur category from 11 July 2014

In a Statement of Changes released today, the Home Office has announced a number of wide ranging changes across various parts of the immigration rules, including in-country switching applications in the Tier 1 (Entrepreneur) category. These changes come into force tomorrow, and have serious implications for anyone with leave to remain as a Tier 4 Student or as a Tier 1 (Post Study Work) Migrant who will in the future wish to switch into the Tier 1 (Entrepreneur) Category.

Post Study Work Switching – The Changes

The changes to the rules for those switching from the PSW category are the most far reaching in these changes.

The first is that PSW-switchers are no longer able to rely on the £200,000 investment route or the £50,000 venture capital route, if they want to make their application in-country. They can now only rely on the £50,000 route – either if they are working in a skilled profession or if the funds are provided by a seed funding organisation or government department.

The second change is that now if your application is based on your business trading and the core service being a skilled occupation, you must, as of before 11 July 2014 (i.e. right now) be registered as either self-employed or a company director. You must remain either self-employed or a company director, right up until your date of application and you must be trading actively throughout this period.

The specified evidence that you must provide to evidence this has also become stricter. Your contracts which show trading must now also contain the duration of the contract and the contracts must show that that trading has been continuous since before 11 July 2014. The alternative is a letter from a bank of the business bank account which confirms the dates that the business has been trading. Further evidence is needed that Applicants are signatories to bank accounts of the business.

Post Study Work Switching – The Effect

If you have leave in the PSW category and want to rely on either £200,000 or venture capital funding you will need to leave the UK and make an application for Entry Clearance. Alternatively, you could consider finding alternative funding opportunities or consider a different category.

The second change is the one that is likely to cause more difficulties. The rules, as now worded, require anyone in the PSW category who at any future point might want to apply for leave to remain as an Entrepreneur to have their business set up and running now. This change has been brought in with no notice and given people in this situation no opportunity to put themselves into a position where they might be able to make their application. Essentially, the route is now closed to anyone who is not already trading.

This effect is perhaps not as wide ranging as it might seem. The PSW route was closed in April 2012 and therefore it is likely that there are comparatively few people left in this category and presumably not all those left will be seeking to make an application to switch into the Tier 1 (Entrepreneur) category. This means that while those affected personally may feel a great detriment to their future, the actual numbers who are affected is likely to be relatively small.

The second point to consider is that since January 2013, all entrepreneurs have had to, as part of their applications, prove that they are genuine entrepreneurs. Someone applying to switch from PSW who set up their business very shortly before their leave expired and who had very little evidence of trading would probably have found their applications subject to particularly close scrutiny and often refused. A poorly prepared application made by someone just looking to extend their leave rather than by someone who was a genuine entrepreneur was always likely to fail. The difference now is that genuine entrepreneurs will have to gather a little extra evidence in support of their applications and for those who are not genuine, the Home Office have some extra provisions to rely on in their refusal letters.

Students Switching – The Changes

Previously, Tier 4 Students were able to switch to the Tier 1 (Entrepreneur) category without leaving the UK, if they were relying on at least £50,000 from either registered venture capitalist firms regulated by the Financial Conduct Authority (FCA), UK Entrepreneurial seed funding competitions, or UK Government Departments.

However, from now onwards Students will only be able switch in country if they rely on either seed funding competitions or money from UK Government Departments. Students can no longer rely on funding from a Venture Capitalist.

Student Switching – The Effect

If you have been lucky enough to secure legitimate funding from a venture capitalist, you will no longer be able to make an in-country application. Your options are that you try to obtain a different source of funding, consider alternative routes such as the Graduate Entrepreneur route, or leave the UK and apply for Entry Clearance, relying on your Venture Capitalist funds.

Other Entrepreneurs Affected

Those applying for Entry Clearance to the UK on the basis of having already invested funds in their business, or those who are applying for an extension of stay in the Entrepreneur category will now need their bank to confirm not only that the business has a bank account, but also that the Applicant is a signatory of that account.

These changes are sudden and on the face of it, appear to be prejudicial to the interests of many applicants. For further advice about how the changes will affect you or advice about making an appropriate Tier 1 (Entrepreneur) application contact or 0203 617 9173.


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