Tier 1 Entrepreneur Extensions
Joshua’s Entrepreneur visa extension application was due to be submitted matter of weeks. He had set up a business and invested funds in the UK and was keen to continue to make the UK his home. Joshua was keen to get assistance from a new immigration adviser so as to ensure that the application progressed as smoothly as possible. Below, we set out how immigration requirements and steps taken to prepare the application and secure Joshua’s visa.
In 2008, the Tier 1 Entrepreneur visa route of the UK Points Based System (PBS) was introduced to allow non-EEA nationals to invest specified funds and business acumen in the UK. As an incentive the entrepreneur was given a route to settlement and a right to be accompanied or joined by their close family members.
The Tier 1 Entrepreneur route replaced the previous, but similar Business Person visa, and the Innovator visa, which was akin to a highly creative Start-up visa, was dispensed with.
The Tier 1 Entrepreneur route was very popular. Applicants were permitted to enter the UK or switch into this immigration route with a view to benefiting from the UK’s professional landscape, business support, robust and transparent legal system and professional labour market.
By 2014, UK Visas and Immigration (UKVI) had issued 5,488 Tier 1 Entrepreneur visas, despite the introduction of the ‘genuine entrepreneur test’ in January 2014. Of the visas issued, approximately 4,300 applicants were already in the UK.
Yet, the despite the approval of thousands of Tier 1 Entrepreneur visas, in 2014 and 2015, this represented only 50% of the applications received by UKVI. Further, according to information from the Migration Advisory Committee (MAC), an independent Government advisory body, only 25% of successful Tier 1 Entrepreneurs applied to extend their visa.
The feeling by 2015, was that the Tier 1 Entrepreneur route was being abused, particularly by poorly ill equipped applicants seeking to enter the UK, often with family members, with no genuine intention of setting up or running a business in the UK. In April 2015, UKVI introduced a business plan requirement to help flesh out the applicant’s business intent. Unsurprisingly, UKVI received many ill-prepared business plans by applicants. And in November 2015, rules were implemented for investments by way of a director’s loan.
On 29 March 2019, UKVI closed the Tier 1 Entrepreneur route to all new applicants. Tier 1 Entrepreneur visa holders already in the UK were permitted to extend their visa. And visa holders may go on to apply for settlement until 5 April 2023.
Why have we presented so much background material about the Tier 1 Entrepreneur visa route?
To demonstrate that applicants applying under this route were, and to some degree still are, viewed with some skepticism by UKVI officials. Consequently, UKVI will scrutinize the extension application to ensure that all aspects of the immigration rules, under the PBS, are met. That is, has the applicant followed through with the initial business plans as specified in the immigration rules.
If any information is missing within the application, or the applicant fails to demonstrate that the immigration rules have been met in full, the application will be refused.
In order to successfully extend the Tier 1 Entrepreneur visa, an applicant must comply with the PBS requirements. UKVI will award the applicant points for each of the areas met.
An applicant must score at least 95 points, of which 75 points will be awarded for Attributes under Appendix A of the immigration rules; 10 points for meeting the English language requirements under Appendix B; and 10 points for meeting the maintenance requirements, as below.
|Item No||Investment, business activity and job creation||Points|
|1||You have: (a) registered with HM Revenue & Customs as self-employed, or (b) registered with Companies House as a director of a UK company, or member of a UK partnership. You must have registered within six months of entering the UK with this entry clearance (if you provide evidence to establish your date of entry) or, in any other case, within six months of the date your leave was granted.||20|
|2||You have invested, or have caused investment to be made by one or more third parties, at least £200,000 (or £50,000 if you were awarded points for £50,000 funding or investment in your last grant of leave) in cash directly into one or more UK businesses. You do not need to provide evidence of this investment if you were awarded points under this table in your last grant of entry clearance or leave to remain as a Tier 1 (Entrepreneur) migrant.||20|
|3||Within the three months before the date of application, you have been: (a) registered with HM Revenue & Customs as self-employed, or (b) registered with Companies House as a director of a UK company or member of a UK partnership.||15|
|4||You have: (a) established a new business or businesses that has or have created the equivalent of at least 2 new full time jobs for settled workers, or (b) joined or taken over an existing business or businesses and your services or investment have resulted in a net increase in the employment provided by the business or businesses for settled workers by creating the equivalent of at least 2 new full time jobs. The jobs must have existed for at least 12 months during your most recent grant of leave or, where that leave was granted less than 12 months ago, for at least the 12 months immediately before the date of the current application.||20|
|5||You have met the English language requirement||10|
|6||You have met the adequate maintenance requirement||10|
Where the application is considered to be less than straightforward, complex, or where there may be an issue meeting the immigration rules, it may be prudent to provide a cover letter to UKVI to clarify the position. Indeed, this is where an approved immigration adviser can prove beneficial. As standard, we provide a detailed cover letter with the application to help UKVI caseworkers understand the applicant’s circumstances and walk them through how the immigration have been met, with reference to the applicant’s specified evidence.
The PBS is supposed to be straightforward. If the applicant meets the requirements, they will be awarded the requisite points and the Tier 1 Entrepreneur visa will be issued to them.
Nevertheless, as stated above, UKVI may view the Tier 1 Entrepreneur visa application with skepticism and caseworkers are advised to take the following subjective considerations into account:
- The viability and credibility of the source of the money referred to in Appendix A
- The credibility of the financial accounts of their business or businesses
- The credibility of their business activity in the UK
- The credibility of the job creation for which they are claiming points if the nature of the business requires mandatory accreditation, registration and/or insurance, whether that accreditation, registration and/or insurance has been obtained
- Any other relevant information
Caseworkers may use evidential flexibility of the immigration rules or verification of the documents to assess the application. This is not strictly necessary due to operational need on UKVI’s part. In the case of R (Sajjad) v Secretary of State for the Home Department  EWCA Civ 720 (17 April 2019), the Court of Appeal upheld UKVI’s position relating to the strict interpretation of the PBS requirements.
The Court noted:
“The objective of the PBS is to enable the respondent to process large numbers of applications fairly and expeditiously by applying clear and objective criteria. It is well established that applicants under the PBS must take great care to comply with its requirement: ‘…to process large numbers of applications fairly and expeditiously by applying clear and objective criteria'”
Therefore, it is important that approved immigration support is sought where there are any concerns.
Back to our client, Joshua. Under paragraphs 245D to 245DF and paragraphs 35 to 53 of Appendix A of the immigration rules, ‘business’ means an enterprise such as a:
- Sole trader
- Company registered in the UK
Upon his entry to the UK, Joshua, had diligently followed the steps set out in his initial business plan. Shortly after his travel, he had registered a new limited company with Companies House in the UK, specialising in serving high quality organic food. Let’s call the business, The Max Café Limited (The Max Café).
As a Tier 1 Entrepreneur, Joshua is only permitted to work for the business or businesses that he has established, joined or taken over. As part of the application, we submitted evidence of Joshua’s employment as a director of The Max Café, including a printout of the company’s filing report from Companies House, the Current Appointment Report and confirmation of The Max Café’s registered address, as evidence that the business has premises in the UK.
Had Joshua been a sole trader, we would have submitted documents to demonstrate that he had worked in a self-employed capacity for the business.
When assessing Joshua’s application, the caseworker at UKVI will carefully consider whether Joshua business functions are genuine or if he can be deemed to be merely an employee of The Max Café? Much will depend on whether UKVI are persuaded as to the level of control that Joshua has for business decisions.
As part of the assessment process, UKVI guidance states that caseworkers must consider the following questions, among others:
- Whether the applicant has responsibility for the success or failure of the business and it can make either a profit or a loss?
- Whether the applicant can decide what work they undertake, when, where or how they carry out such functions?
- Whether the applicant can hire someone else to do the work?
- Whether the applicant is responsible for fixing any unsatisfactory work in their own time?
- Whether the applicant agrees a fixed price for the work?
- Whether the applicant uses their own money to buy business assets, cover running costs and provide tools and equipment for their own work?
- Whether the applicant can work for more than one client, depending on the business type?
- Whether the applicant can put in bids or give quotes to get work?
- Whether the applicant is under direct supervision when working?
- Whether the applicant submits invoices for the work they have done?
- Whether the applicant is responsible for their own National Insurance and tax submissions?
- Whether the applicant gets holiday or sick pay when they are not working?
- Whether the applicant operates under a contract for services or consultancy agreement that uses terms like ‘self-employed’, ‘consultant’ or an ‘independent contractor’?
UKVI will use the questions and answers to gain a better understanding of how the business operates and the roles that the applicant plays within the business. Nevertheless, the questions only form part of the assessment. A negative response to one question will not mean that the application is immediately refused. Rather, UKVI caseworkers are advised to take holistic approach when assessing the Tier 1 Entrepreneur extension application.
As highlighted above, an applicant must only work for the business they had set up, joined or taken over. The applicant may also study in the UK, providing those studies do not prevent the applicant from meeting the extension criteria.
Joshua had a Masters’ degree in Business (MBA) prior to his arrival to the UK. After his initial travel to the UK, Joshua began studying for a short business accreditation in food management. We were able to show that the course was complementary to his business functions, and not detrimental to meeting the PBS requirements.
To successfully extend the Tier 1 Entrepreneur visa, an applicant must evidence that they had invested the following funds into a UK business or businesses. That is:
- £200,000 cash investment; or
- £50,000 cash investment.
The sums invested in the UK business will depend on the level of funding cited in the applicant’s initial application and the source of those funds.
UKVI will discount any funds spent by the applicant, in a way that is deemed not to be an investment into the business. Therefore, the following investment or spend is excluded:
- Funds used to pay the applicant’s own salary or remuneration
- Funds used to purchase the business from a previous owner, where such funds ultimately go to that previous owner, rather than into the business being purchased.
- Funds invested into a business outside of the one run by the applicant
- Spending that is not directly for the purpose of establishing or running the applicant’s own business or businesses
Joshua had invested his personal funds of £200,000 into The Max Café, by way of a Director’s loan. This is permitted where the applicant becomes a director of the company. The director’s loan should be unsecured and make clear that any third parties seeking debt repayments will be prioritised, ahead of the applicant.
UKVI are very clear about the funds that will not be deemed to be investment funds. They are:
- A director’s loan by the applicant to the business that is secured and unsubordinated in favour of third-party creditors.
- Investment in property development and property management.
The investment in property is an interesting one. The requirement is meant to ensure that funds are invested into the UK economy. There are limited instances where an applicant may invest in a property, which UKVI list in their guidance, and is an example that fits one of our past clients, who has since secure settlement. That is, where the applicant purchases premises to run as a hotel, and the intention is to provide rooms to guests in keeping with that arrangement.
In that case, it was made clear to UKVI that the client had used the purchase property to facilitate the provision of services to guests, and was not relying upon the capital gain from the property or from rental income. In Joshua’s case, submitted evidence of the transfer of funds into The Max Café, including documents from his accountant and a copy of the Director’s Loan Agreement.
Applicants seeking to apply for an extension of their Tier 1 Entrepreneur visa must, as part of the application, evidence that they have created the equivalent of 2 full-time paid employment positions, for at least 2 people who are settled in the UK. For the purposes of the application, a full-time position is seen as a 30-hour working week. Where the applicant has joined and invested into an existing business, they must show that they had created 2 additional full-time employment roles.
The rules relating to job creation can be quite intricate. For instance, each job role must have existed for at least 12 months. The job role need not have been filled for 12 consecutive months. Instead, one job role may have been filled by a resident worker for 6 months in one year, and 6 months in the following year. Nonetheless, where this applies, the applicant must demonstrate that the job was the same role.
What the applicant cannot do is arrange for settled workers to combine 2 different roles to meet the 12 months’ requirement. Therefore, the applicant running a dental practice cannot employ a full-time settled worker as a sale assistant for 6 months in one year, and combine this with the job of a full-time dentist for 6 months thereafter. See our recent blog about how the pandemic may impact upon Tier 1 Entrepreneur’s visa requirements.
Joshua met job creation immigration requirement because The Max Café had employed 4 full-time settled workers in the UK for at least 12 months. It is not necessary for the settled workers to be in employment as of the date of the application, though they must have been employed for a 12 months’ period.
Had Joshua been registered as self-employed, rather than as a director of a limited company, Joshua would have been expected to have employed the settled workers directly.
As part of the application, we submitted evidence of The Max Café’s job creation in the form of:
- Printouts of Real Time Full Payment Submissions to confirm the reporting of the company’s Pay As You Earn (PAYE) income tax to HMRC, showing the total payments made to the settled employees and tax deductions
- Duplicate salary slips or wage documents issued to the workers covering the full period of their employment
- Confirmation of the start date, number of hours paid and the hourly rate for each employee used to claim points, including any changes in the number of hours paid or hourly rate and the dates of the changes
- The passport biographical pages (the page with the person’s photograph and personal data), of each employee
- A copy of the immigration stamp or endorsement within the passport, their full birth certificate showing the name of at least one parent, where the employee is an overseas national
- A printout from Companies House of the company’s filing history page and the applicant’s personal appointments history, showing the date of their appointment as director
Had Joshua joined and invested in an existing business, he would have needed to submit a letter from an accountant, to verify the dates of the job creation.
Joshua was surprised by the need for him to collate and provide such documents. After all, the information to be submitted was held by various government bodies. Joshua’s view was that UKVI can simply access the required information from HMRC or the local Council. That is not how the application process works. It cannot be stressed how important it is for all applicants to ensure that the specified documents are with the UKVI caseworker before the date of the decision. If not the application will be refused.
There are provisions for UKVI to contact the applicant or representative for further information, clarification or even document. But such provisions are time limited and may not allow the applicant sufficient time and opportunity to gather and provide the requested data.
As of 29 March 2019, all applicants will automatically score 10 points for English language. This is because they would have met the requirements in the previous application for Tier 1 Entrepreneur or Tier 1 Graduate Entrepreneur visa.
Joshua was therefore awarded 10 points for English language.
A Tier 1 Entrepreneur who is seeking to extend their visa must show that they have sufficient funds to support themselves (and any dependant family members). If evidenced, UKVI will award 10 points for maintenance.
Sufficient funds mean that the applicant has held £945 of personal savings, for at least 90 consecutive days’ period immediately preceding the application date. In Joshua’s case, this was evidenced by providing his personal bank statements for the relevant period.
Applicants should be careful not to focus solely on the meeting the business requirements at the expense of demonstrating that they can continue to look after themselves in the UK, otherwise the application will fail.
Underlying all of the requirements is the ‘genuineness test’ that was introduced by UKVI to determine whether the information and applicant are credible – see above under Credibility.
Criminal and civil record checks will be carried out in every application. Given that UKVI is not bound to the Rehabilitation of Offenders Act, every criminal offence will be considered as part of the application no matter how minor or when the act was committed. Fortunately, Joshua did not have any concerns. Still, it is important for an applicant to consult an approved immigration adviser if they have any questions or concerns.
Processing times for an application to extend the Tier 1 visa, submitted via the standard route, is approximately 6 months, though applications are normally concluded within 8 weeks.
Joshua submitted his application by way of the super priority service. For a premium, this guaranteed Joshua a decision within 24 hours.
Length of stay
Joshua attended the Service Centre near Central London to provide his biometric data and his application was approved soon after!
Joshua had initially been granted 3 years and 4 months leave to enter the UK as a Tier 1 Entrepreneur. Following the success of his Tier 1 Entrepreneur extension visa, Joshua was granted a further 2 years leave to stay in the UK.
The Tier 1 Entrepreneur visa route was introduced to allow business minded individual to contributes to the UK economy. Due to apparent abuse and concerns, the visa route was closed to new applicants. Nevertheless, current Tier 1 Entrepreneur may continue to extend their visas and apply for settlement. Given the background of this category, it is absolutely crucial for applicants to properly prepare their applications to secure the necessary points under the PBS as well as meet the overriding credibility considerations.
We have highlighted some key things to consider, which we hope has been of help to you.
Written by Carla Thomas – Managing Director at Thomas Chase immigration.
Thomas Chase Immigration offer immigration assistance to individuals and families.
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