Tier 1 Investor Visa Route Is Open - But What's Changing And Why?
On Thursday, 6 December 2018, it was widely reported in the UK press that the Tier 1 Investor visa route would be temporarily suspended for new applicants at midnight on Friday, 7th December 2018 pending publication of new Immigration Rules in Spring 2019.
Following the media announcement, there was no official statement or guidance from the Home Office regarding the suspension. Then, on Monday, 10 December, the Immigration Law Practitioners’ Association (ILPA) announced that it had been informed by the Home Office that there was no suspension of the Tier 1 (Investor) visa, as yet.
On Tuesday, 11 December the Migration Policy team at the Home Office released the following official statement:
It remains unclear exactly how media outlets such as the BBC, Guardian and Sky News came to report that the Tier 1 Investor visa route would be suspended with less than 24 hours notice, although one can only assume that the information was provided by a Government source. It also remains unclear why the Home Office appears to have decided to make a complete U-turn and keep the Tier 1 Investor route open, at least for the time being. However, an announcement by Immigration Minister Caroline Nokes does shed some light on changes that are likely to be afoot for the Tier 1 visa category.
Why is the Tier 1 Investor visa category being reviewed?
The Tier 1 Investor visa scheme is being reviewed as part of a crackdown on organised crime and money laundering in the UK.
Immigration minister Caroline Nokes said: “The UK will always be open to legitimate and genuine investors who are committed to helping our economy and businesses grow. However, I have been clear that we will not tolerate people who do not play by the rules and seek to abuse the system. That is why I am bringing forward these new measures which will make sure that only genuine investors, who intend to support UK businesses, can benefit from our immigration system.”
It is clear therefore that the Immigration Rules, which set out the legal requirements for the Tier 1 Investor visa category, will be changing. Traditionally, new Immigration Rules are introduced on 6 April each year, so it may be that the new Investor visa rules will come into force on 6 April 2019. However, the Home Office could also bring in changes sooner than this if they wish.
What may be different for Tier 1 Investors?
The main changes for Tier 1 Investors are likely to be in relation to the source of funds requirement and also to the range of permitted investments available to investors.
Source of funds: new 2 year requirement
Under the new Tier 1 Investor rules, applicants are likely to need to demonstrate that they have held their £2 million investment funds for at least 2 years.
This contrasts with the position hitherto, whereby there was no requirement for investors to have held their investment funds for any particular period of time. Instead, investors could hold their funds for less than 90 days if they provided mandatory evidence of source of funds or for more than 90 days without needing to prove the source of their funds.
In practice though, the new 2 year rule will make little difference to most legitimate and genuine investors. The Home Office has always had power to refuse a Tier 1 Investor visa application if not satisfied that the applicant’s investment funds were lawfully obtained. For this reason, our Tier 1 Investor visa clients have always been advised to provide evidence to demonstrate the provenance of their funds covering at least a 2 year period, even though this was not a strict requirement of the rules. Therefore, it may be said that the new rules will merely legislate for something that genuine investors have already been doing in practice.
Source of funds: new independent audit requirement
In a more obvious departure from the current scheme, under the new rules applicants will most likely be required to provide comprehensive audits of their financial and business interests as part of their initial Tier 1 Investor visa application.
Independent, regulated auditors will assess applicants’ financial and business interests and check that applicants have had control of their funds for 2 years.
According to Skynews, the audits will have to be carried out by regulated UK auditing firms that are separate from any qualifying investments or the visa application. However, it is currently unclear precisely how the auditing will take place in practice. The BBC suggests that the Home Office will be appointing an independent auditor to audit all applications, whereas the Guardian suggests that applicants will need to provide an audit report themselves.
Investment options: new focus on supporting UK businesses
Until now, Tier 1 Investor visa holders have been permitted to invest in either UK government bonds or loan/share capital in active and trading UK companies. Read more about the investment options for Tier 1 Investors.
Looking ahead, Tier 1 Investor visa holders will most likely be required to invest in active and trading UK companies. It will no longer be possible to invest in UK government bonds, although UK corporate bonds should be acceptable. The Home Office has also indicated that there will be a provision for pooled investments, supported by the government, to back projects with a ‘clear economic benefit to the UK’ such as supporting small and medium-sized businesses.
Under the current rules, an active and trading UK company is one which has its registered office or head office in the UK, a UK business bank account showing recent business transactions and is registered for UK corporation tax. Multinational companies with either a registered office or head office in the UK are acceptable. The company must also be doing business. The purchase of loan or share capital in non-trading or dormant companies is not accepted as a qualifying investment under the current rules and this is likely to remain the case.
What is not changing for Tier 1 Investors?
The current scheme requires Tier 1 Investor visa applicants to have opened a UK bank account, to have access to at least £2 million and to be of good character. There is no indication that these requirements will be changed. And, perhaps most importantly, legitimate and genuine investors, who have obtained their investment funds lawfully, will still be able to enter, remain and settle in the UK under the new Tier 1 Investor visa rules to be published in Spring 2019.
Read more about the current requirements for a Tier 1 Investor visa.
Contact Our Investment Immigration Barristers
For expert advice regarding any aspect of the Tier 1 Investor visa category, or for expert assistance preparing a Tier 1 Investor visa application, contact our investment immigration barristers on 0203 617 9173 or complete our enquiry form below.