The Tier 1 Entrepreneur visa route was closed in March 2019. It was belatedly replaced by the Innovator and Start-up categories. It was said that the set-up of these two categories was a move by the UK government to boost entrepreneurship and innovation in the UK. The central feature is that applicants must be endorsed by an approved organisation involved in encouraging entrepreneurship and new business. However, this endorsement criteria is notoriously difficult to comply with and the practical result has not reflected the aim.
The plan for these two categories was in line with the Migration Advisory Committee’s 2015 review of entrepreneur visas, which recommended third party endorsement, “partnering with reliable organisations in order to select migrant entrepreneurs”, where “the selection of entrepreneurs should be carried out by industry experts where possible”. This category was developed as a strategic plan to outsource business plan review to businesspeople and industry experts. However, it was not considered thoroughly how endorsement should work in practice and this has made it very difficult for entrepreneurs who cannot apply for a visa without the endorsement.
In-house vs. outsourced IT: what makes the most business sense?
There are currently 33 endorsing bodies. Of these only a handful of the Innovator endorsing bodies currently accept open applications, many have very limited publicly accessible information about their process on their website, and many only accept applications from within their organisations and membership resulting in an effective closure of the category to most prospective applicants. By their own admission, some endorsing bodies are still either ill-equipped, unready or simply not accepting applications for endorsement. It is not their fault. When this route was opened most endorsing bodies were given limited guidance about their duties by the Home Office beforehand. The visa route gives the appearance of a lack of thought and preparation.
The UK economy is losing out on talented entrepreneurs as a result. The most recent statistics from the Home Office has shown that the newly created Innovator and Start-Up routes have not been as successful as expected. Since inception, Innovator has received 4 entry clearance applications and Start-Up has received 32 applications, which seems bizarrely low compared to the popularity of the prior Tier 1 Entrepreneur route which granted around 50,000 successful applications in the UK between 2008 and 2018.
The prior Tier 1 entrepreneur visa category was not perfect. Certainly it was more expensive, but the qualifications of the rules were more achievable. However, the good news is that the marketing behind the Start-Up and Innovator visas makes one thing clear in that the UK wants to be open for business and it is encouraging people to try to come and set up a business in the UK. It is just a shame, following the relative success of the Tier 1 Entrepreneur route, that these new categories have yet to live up to its standards.
Lean startup for tech entrepreneurs
We are hopeful that the Home Office will seek to fix the teething issues with these routes and provide more guidance to the endorsing bodies. Reducing the required level of funding below that required for a Tier 1 Investor visa is more in keeping with the entrepreneurial spirit and making the UK more accessible to genuine innovators with business plans that can promote growth in key sectors in the UK. Once the current wrinkles of these routes have been ironed out, it should become more streamlined for individuals to apply for endorsement and then their visas.
Despite the challenges and lack of applications received to date, it should be possible for an applicant to be granted one of these visas if they meet the new criteria or, in the alternative, consider other visa options with their immigration adviser who should be up-to-date with all the most changes to the rules.
Currently, the most popular alternative visa options that entrepreneurs can explore are:
• Sole Representative: This route pre-dates the 2008 introduction of the Points Based System 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.
• Tier 1 (Exceptional Talent): For those considered to be exceptionally talented individuals in science, humanities, engineering, the arts, and digital technology.
• Tier 1 (Investor): This requires the applicant to have at least £2 million to invest which, for many entrepreneurs, can be an unachievably high sum when establishing their business.
• Tier 2 sponsorship: This is a slightly longer process. 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 should also 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.
Brexit opens up the possibility of new categories being introduced in the near future and we, like others, are standing by to hear more about proposed immigration initiatives. Watch this space!
Written by Claire D. Nilson and Hodon Anastasi, Partner and Paralegal at Faegre Baker Daniels
