Tier 1 Entrepreneur: Recent updates in UKVI policy guidance

Within the space of 4 weeks at the end of 2014, UK Visas and Immigration (UKVI) introduced several key amendments to its Tier 1 Entrepreneur policy guidance. On 21 November 2014 and 18 December 2014, UKVI provided helpful guidance in relation to the prohibition on investing in companies mainly engaged in ‘property management and development’, gave us further insight into the sort of questions that are likely to be asked at Tier 1 Entrepreneur interviews and clarified the definition of a ‘venture capital firm’.

Investment in Property Development and Property Management

As is well known, under the Immigration Rules, Tier 1 Entrepreneur visa applicants are not permitted to invest in UK businesses that are principally engaged in property investment, property management or property development.

This longstanding prohibition exists, according to the Home Office, because it is not the intention of the category to allow Tier 1 Entrepreneur visa applicants to set up as landlords and let properties in the UK. The intention is to promote UK competitiveness in business and to focus investment on promoting business that is beneficial to the UK economy.

The latest Tier 1 Entrepreneur Policy Guidance confirms that ‘property development’ is any development of property (real estate) owned by the applicant or their business to increase the value of the property with a view to earning return either through rent or a future sale, or both.

‘Property management’ is the management of property (regardless of whether or not it is owned by the applicant or their business) for the purpose of renting it out or for resale. This would include (and therefore prohibit) investment in student accommodation management services.

The updated guidance confirms, however, that Tier 1 Entrepreneur visa holders are permitted to invest in:

• A company that is mainly involved in construction;
• A decorating business if they do not own the property being improved;
• A hotel where the property is not being rented and guests do not sign a tenancy agreement; and
• An estate agency if they are not involved letting the properties or acting as landlords (i.e. the company is mainly involved in property marketing).

The Tier 1 Entrepreneur Policy Guidance also clarifies that the core principle underlying the rule is that the business income must be generated from the supply of goods and/or services, not from increased property values or from rent.

Tier 1 Entrepreneur Interview: Genuine Entrepreneur Test

If UK Visas and Immigration has any concerns regarding a Tier 1 Entrepreneur application, or if they simply require further information in order to assess whether an applicant is a genuine entrepreneur, the applicant may be invited to attend an interview as part of the application process. In its updated guidance, UKVI has provided a list of factors which, it says, may inform questions asked at a Tier 1 Entrepreneur interviews. Questions may be based around and take into account:

• Evidence submitted in support of application;
• The viability and credibility of the applicant’s source of money;
• The viability and credibility of the applicant’s business plan;
• The viability and credibility of the applicant’s market research into their chosen business sector;
• The applicant’s previous educational and business experience (or lack thereof);
• The applicant’s previous immigration history and previous activity in the UK;
• Any other relevant information.

Venture Capital Firms

The updated Tier 1 Entrepreneur Policy Guidance also provides further clarification in relation to the definition of ‘venture capital firms’. To be considered acceptable as a source of investment funds, venture capital firms must be registered with the Financial Conduct Authority (FCA) and their entry on the register must include permission to:

• arrange, deal in or manage investments; or
• manage alternative investment funds.

When considering application for entry clearance or leave to remain as a Tier 1 Entrepreneur on the basis of venture capital funding, immigration officers will check the register to confirm that the venture capital firm is registered and authorised to carry out at least one of the above activities.

Contact Us

For advice and assistance with preparing an application for a Tier 1 Entrepreneur visa, or appealing against a decision to refuse a Tier 1 Entrepreneur visa, contact our immigration barristers in London.