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Visa options for overseas entrepreneurs setting up a UK business
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Visa options for overseas entrepreneurs setting up a UK business

The Tier 1 (Entrepreneur) visa route was closed in March 2019. At the same time, two new immigration routes — Innovator and Start-up — came into being. But entry to either scheme rests on the notoriously difficult task of getting an endorsement.

Innovator – just too big a risk?

I have recently been giving some initial advice to a businessman who had managed to secure an elusive endorsement letter for the Innovator route. He was already in the UK on a Tier 2 work visa and was in the process of forming a spin-out company from the organisation employing him.

When we discussed what the requirements would be for extending his permission to stay in the UK under the Innovator route and then applying for indefinite leave to remain (ILR), he concluded that the risks associated with switching from the relative security of his Tier 2 status — where he will be able to apply for ILR in three years time, having already been here two years — to the Innovator route were just too great.

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My client had the backing of his employer, the backing of an endorsing body and was confident that the new business would be successful — based on a typical understanding of what that means (i.e. generating jobs, creating profit, paying taxes etc.). But “successful” enough to meet the extremely high threshold for an ILR application under the Innovator route is a whole different ball game. 

He also had no way of knowing if the organisation offering him the initial endorsement would still want to be an endorsing body at the time of his extension and ILR application. Some have already pulled out.

At this moment, it looks as though staying in the Tier 2 route for now in his current employment may be the best option for him (although we are looking at ways we may still be able to achieve the spin-out in that scenario) so he can be certain that he’ll be able to apply for ILR successfully.

What other options are available for entrepreneurs?

The above individual was in a fortunate position because he had a viable fall-back option.

But we know that there are many entrepreneurs out there wanting to come to the UK to set up a business, and eventually settle, who are in a different position. 

What are the other possible options for them?

I’ve set out below the most popular options that entrepreneurs can explore as an alternative to the Innovator route, along with an overview of the general requirements for each.

The Sole Representative visa

By far the most popular alternative is the Sole Representative of an Overseas Business route, widely known as the “Sole Rep visa”.

This route pre-dates the Points Based System, which was introduced in 2008, and is designed to enable an overseas business to send a senior representative to the UK to establish a registered branch or wholly owned subsidiary in the UK.

The main requirements are that:

  • the business must have its headquarters and principal place of business outside the UK;
  • it must be establishing its first commercial presence in the UK (the legal entity can already have been set up but must not yet be employing staff or transacting business);
  • the UK operation must perform the same type of business activity as the overseas business;
  • the individual who is being sent to the UK must:
    • be employed by the overseas business — there is no minimum employment period and there is no bar on an director who is also classed as an employee from applying;
    • have sufficient authority, experience and knowledge to establish the UK operation;
    • not be a majority shareholder;
    • not fall foul of the general grounds for refusal;
    • meet the English language requirement (Level A1 unless they are from a majority English speaking country or have an academic qualification that meets the requirements);
    • be able to maintain and accommodate themselves and any family members without recourse to public funds; and
    • where required, take a TB test.

Those granted leave to enter the UK under this route can only work in their capacity as the representative of the overseas company. They will receive an initial visa of three years and can then extend this providing they have set up the UK operation which has started to generate business in the UK, are still needed to run it and are in receipt of a salary. 

This route leads to ILR and family members can accompany or join the main applicant.

Generally with these applications, some pre-application changes to the business structure/shareholding etc. need to be made. But providing these changes are genuine, entrepreneurs that are connected with an overseas business already can benefit from this route.

This option can also be used for a couple where one of them is a majority shareholder and the other is also working for the business. The non-majority shareholding partner can apply for the visa with the majority shareholding partner applying as a dependant.

Tier 1 (Exceptional Talent)

The UK’s Tier 1 (Exceptional Talent) visa is also starting to receive attention from those who might otherwise have applied under the old entrepreneur route.

This is designed for renowned individuals in the following fields:

  • science
  • engineering
  • humanities
  • medicine
  • digital technology
  • the arts
  • fashion
  • architecture
  • film and television

There are two stages to the application process. First of all an endorsement must be obtained from the relevant organisation:

  • Arts Council England – for the arts and culture
  • British Academy – for humanities and social sciences
  • Royal Academy of Engineering – for engineering
  • Royal Society – for natural sciences and medical science research
  • Tech Nation– for applicants in digital technology

The application for an endorsement must include evidence that demonstrates the high calibre of the applicant and be supported by experts in the field.

Once an endorsement is obtained — and applicants can expect their application to be scrutinised to ensure they really are world leaders or emerging leaders in their field — the visa can then be applied for.

Successful applicants are able to work on an employed or a self-employed basis which includes being able to set up a business in the UK.

This route leads to ILR and family members can accompany or join the main applicant.

Tier 2 sponsorship

It often comes as a surprise to entrepreneurs when I explain to them that it is also possible to use Tier 2 of the Points Based System. Tier 2 sponsorship is not just for employees. It can be used for owners, shareholders, contractors and consultants, in certain scenarios.

This can be a little more complex. First of all, the entrepreneur has to arrange for the UK business to be formed in order to be able to apply for a sponsor licence. There are various ways that this can be achieved but the key is that the entrepreneur must have a business contact in the UK who they can trust. An HR specialist, for example, could be hired to oversee the start-up phase, including applying for a sponsor licence. Alternatively, if the entrepreneur owns a company overseas, an employee could be sent over under the sole representative route to set things up.

In very basic terms, once the company has a sponsor licence the entrepreneur will be able to be sponsored providing:

  • the total remuneration package for their UK role will be:
    • at least £159,600 if they will own more than 10% of the shares in the UK entity; or
    • at least £30,000 (or the minimum amount on the relevant SOC code) if they will own less than 10%. In the case of the lower package, the role may need to be advertised first of all.

In both scenarios, the role must be at least graded as level 6 on the Regulated Qualifications Framework (roughly degree level — which would be the case for management/director roles).

The person sponsored under Tier 2 must work for the UK sponsor but this can be as a shareholding director remunerated by way of dividends and/or salary.

This route leads to ILR and family members can accompany or join the main applicant.

Tier 1 (Investor)

Finally, very wealthy entrepreneurs can still use the Tier 1 (Investor) route.

This basically requires the applicant to have at least £2,000,000. This can be their own money, their spouse or partner’s money or held jointly by the couple, and to have held this for two years or be able to otherwise demonstrate the source of the funds.

The funds must be able to be transferred the UK.

Before making the visa application, the investor must have been able to open a UK bank account.

To maintain the visa, the money must be invested in active and trading UK companies.

Successful applicants are able to work on an employed or a self-employed basis which includes being able to set up a business in the UK.

This route leads to ILR and family members can accompany or join the main applicant.

Conclusion

The closure of the entrepreneur route has meant than many individuals who were hoping to apply under it have had to significantly re-think their plans.

There are pros and cons to each of the above options and I’ve only provided a very brief overview of each for now. Both the initial requirements and the requirements for extensions and ILR applications need to be considered carefully when exploring each route.

Nichola Carter

Nichola heads the immigration team at Carter Thomas (www.carterthomas.co.uk). A lawyer with 20 years' experience, she also sits on The Law Society’s Immigration Committee and supports the renowned EU Rights Clinic in Brussels. Nichola's main work relates to advising universities, schools and businesses on sponsor compliance and individuals seeking to invest, work or start a business in the UK. She regularly provides media comment including for the BBC and FT and is happy to be contacted for comment. Nichola tweets from @carternichola

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