The new start up business visa and a review of the Tier one business category
The new start up business visa category, recommended by the Migration Advisory Committee (MAC) – to be introduced in or about April 2019, will replace the Tier one graduate entrepreneur (exclusively for graduates) and compliment the exceptional talent and the Tier one entrepreneur visa. As regards the exceptional Talent route, the Home Secretary, Sajid Javid, has agreed to double the number coming to the UK under this category to 2000 per annum, which shows the Government’s commitment to making the UK a dynamic open globally trading nation.
This will be a popular visa as it will not require the applicant to make personal funds available for investment purposes, nor rely on a very narrow field of third party endorsers as with the graduate visa, which requires endorsements by a university or the department of international trade for the purpose of establishing a business in the U.K. It also requires a minimum investment of £50,000.
Under the new visa category, approved business sponsors will vet the feasibility of the business plan unlike under the current Tier one entrepreneur route which has much to be desired in so far as case workers at the Home office are concerned, some of whom have little or no business acumen and lack at times the necessary training to consider the credibility of the genuine entrepreneur test under this category. Whilst on the subject, MAC has also recommended there should be a selection of experts who will be in a position to examine the application and business plan to ascertain a genuine entrepreneurial test working in conjunction with home office case workers. In my view this will delay matters and it would be better if these applications were examined by experts subcontracted by the Home office rather Home Office case workers, but the decision would come from the Home office as currently.
Neither is it going to be necessary, as it is under the graduate entrepreneur scheme, or the exceptional talent route, for the applicant under the new start up scheme, to have a university degree as a prerequisite to the grant of the visa. The idea is to encourage those with business ideas to be creative and to benefit the UK economy by their expertise and talents, which does not always mean that these qualities are the preserve of those with university degrees.
As a result what the government is looking for is “brains” rather than financial wherewithal. So the proposed visa does not mention as one of its requirements the need for a minimum investment, or the employment of a set number of settled workers as required under the current tier one entrepreneur scheme, which requires in general the investment of at least £200,000 in a business and the creation of at least two new jobs as a result of that investment.
The above advantages should enable a greater section of migrants with business acumen to apply and encouraging investment in this way can only be a good thing for Britain. The new visa category will in my view widen the pool of talented entrepreneurs and business founders, and make the visa process faster and smoother for entrepreneurs coming to the UK.
To receive approval of selected business sponsors, and to encourage the establishment of the business so it is not frustrated due to lack of funds, those who cannot provide the necessary funds but can provide the expertise are going to require an injection of capital from venture capitalists who will also provide their expertise and promote the business in consideration for a slice of the equity. In this way only the entrepreneurs of highest quality will be chosen.
Whilst sceptics may say that entrepreneurs could be discouraged going down this route as they would not want to part with their equity, if they don’t have the funds, yet see the advantages of this route , it may well be worthwhile to have a business sponsor as a partner, who will not only inject required capital but from whom the entrepreneur can learn in terms of promoting the business , and who knows, if the loan is repaid , say in the first year of trading, the business sponsor may agree to take a lower percentage of the profits of the business. At the end of the day the business entrepreneur would have achieved the required objective. In addition to having the option of endorsements from business sponsors, it is open to the applicant if a university graduate ( need not be), to receive endorsements from a university or the department of international trade.
There is a slight draw back in that business sponsors who endorse the approval of the venture for immigration visa purposes and are prepared to make a loan to the business in return for a share of the profits, may be selective in the companies they endorse, thus narrowing down the specialty and expertise of the entrepreneur for fast running returns.
It will be crucial to consider from how far afield business sponsors may be drawn and recommended by the Migration Advisory Committee to the Government .
I believe the consequences of Brexit on the UK economy will determine how broadly across various sectors of industry and commerce business sponsors will be drawn.
This new scheme is as far as I am aware to cater for new businesses starting off, and so it would not be an appropriate business category if an entrepreneur wishes to take over or join an existing business , and it seems to me in these circumstances, he/ she will need to make the required minimum investment of at least 200,000 and comply with the Tier one entrepreneur visa conditions.
It is hoped that the time spent on this visa unlike time spent under the graduate entrepreneur scheme, will count towards ILR as the idea is to establish a permanent business in the U.K. for the foreign national where he / she can make his/ her main home with family . It is important that this visa category does lead to ILR so that it encourages business start ups in this special category for the benefit of generating profits for the UK economy.
Entrepreneurs play a key role in creating jobs and driving economic growth in the U.K., and these changes would ensure the U.K remains a world leading destination for the best global talent, so important after Brexit.
by Dr Bernard Andonian
Dr Andonian is a guest contributor at Legafit.com. DR Andonian has been a practicing lawyer for over 30 years and also sits as a Judge of the First-tier Tribunal (IAC). He has been at the forefront of legal developments both as a practicing lawyer and a s a Judge, and has demonstrated his unique skills, through his writing, in untangling complex legal phenomenons and distilling them down to basic concepts that can be understood by everyone.