The New Global Entrepreneurs Visa: – is It a Viable Proposition or is the UK Currently Closed for Business?
The Home Office’s new innovator visa went live, on 29 March 2019.
They replace the Tier 1 (Entrepreneur) route which is now closed to new applicants, and the Tier 1 (Graduate Entrepreneur) route which will close from 6 July. In its immigration white paper, the government says that the route will also cover EU entrepreneurs from 2021.
All applicants for these visas must now have the endorsement of an organisation certifying that their business is innovative, viable and scalable. Start-up applicants do not however need any funding secured, innovator applicants must have £50,000 lined up, and need only be seeking to break into national as opposed to international markets.
There is a new start-up visa route but that’s only available on a temporary two-year basis. The individual must then either leave the UK or progress to the innovator route. The start-up route is designed for less experienced entrepreneurs who may be keen to benefit from the help those incubators, accelerators and other mentoring programmes offer.
Other than that, the only other potential options for an entrepreneur seeking to bring their business idea to life in the UK are:
- Tier 1 (Investor) — for which the applicant needs to have £2 million
- Tier 1 (Exceptional Talent) — restricted to globally recognised / emerging leaders from very specific fields
There are no other routes for an entrepreneur seeking to bring their business idea to life in the UK.
The Immigration Rules describe the scheme in fairly simply terms: a category “for more experienced business people seeking to establish a business in the UK” who have an “an innovative, viable and scalable business idea which is supported by an endorsing body”.
More information on what all that means is contained in the guidance for endorsing bodies.
People who have the skills to run a successful business — who can meet market needs/creative competitive advantage, who can show evidence of job creation in the UK and the potential for growth into both national and international markets — are serious entrepreneurs.
The innovator visa is only issued for three years initially. The UK has gained a reputation for robust – and not always fair – immigration enforcement practices over the years. People of the calibre required under this scheme will need to feel confident before committing. They will need to be sure that they will not be forced to leave further down the line, with the knock-on effect on children’s schooling, customers, staff, investors, reputation, etc.
Extending the visa
In order to extend their visa they’ll need to provide an endorsement letter from an approved endorsing body that confirms all of the following:
(a) The applicant has shown significant achievements, judged against the business plan assessed in their previous endorsement.
(b) The applicant’s business is registered with Companies House and the applicant is listed as a director or member of that business.
(c) The business is active and trading.
(d) The business appears to be sustainable for at least the following 12 months, based on its assets and expected income, weighed against its current and planned expenses.
(e) The applicant has demonstrated an active key role in the day-to-day management and development of the business.
(f) The endorsing body is reasonably satisfied that the applicant will spend their entire working time in the UK on continuing to develop business ventures.
This is if the business is still the same after three years — otherwise they need to start again (by demonstrating that their business is innovative, viable and scalable and securing endorsement).
Staying in the UK permanently
An innovator visa holder can obtain indefinite leave to remain in the UK after three years. To get it, they need an endorsement letter that confirms that they’ve built a business that still meets the above requirements plus at least two of these criteria:
- The number of the business customers has at least doubled within the most recent three years and, at the time of the application, is higher than the mean number of customers for other UK businesses offering comparable main products or services.
- The business has generated a minimum annual gross revenue of £1 million in the last full year covered by its accounts.
- The business is generating a minimum annual gross revenue of £500,000 in the last full year covered by its accounts, with at least £100,000 from exporting overseas.
- The business has created the equivalent of at least 10 full-time jobs for resident workers.
- The business has created the equivalent of at least five full-time jobs for resident workers, which have an average salary of at least £25,000 a year (gross pay, excluding any expenses).
- At least £50,000 has been invested into the business and actively spent furthering the business plan.
- The business has engaged in significant research and development activity and has applied for intellectual property protection in the UK.
These requirements set the bar extremely high. Only the most innovative entrepreneurs are likely to be able to build a business in the UK that will meet the requirements that will, in turn, allow them to stay to oversee it on a long-term basis. Are these high performers going to want to place themselves and their businesses into the highly restrictive and risky endorsement regime that’s being clumsily rolled out?
The role of third party endorsing bodies is central to the new route. If the entrepreneur cannot get an endorsement, they cannot get a visa in the first place. If they cannot get another endorsement to remain after three years or apply for indefinite leave to remain, they cannot stay in the UK.
If the endorsing body pulls the endorsement at any point, the innovator risks their leave to remain being curtailed. At the drop of a hat, they may have to leave the UK and wind up/sell their business through no fault of their own.
Making use of business experts to endorse visas was recommended by the Migration Advisory Committee in its 2015 report. It gave some advice to the government on choosing the endorsing bodies:
In selecting partners to provide third party endorsement, there should be an emphasis on reliability and robustness, with adequate scrutiny and monitoring agreed with partners in advance to guard against abuse.
Those endorsing bodies that are starting to provide some limited information are strongly indicating that applicants must apply to join their existing accelerator/investment programmes; that they will operate as an endorsing body on a “selective or invite-only” basis; and that they won’t be accepting “open” or “public” applications.
This offering may be attractive to less experienced entrepreneurs applying under the start-up visa route. But so far, there’s no indication that any of the organisations currently on the list will offer the type of endorsement that might be attractive to the high calibre entrepreneurs the innovator route is aimed at.
The guidance the Home Office has issued to endorsing bodies does not place any restrictions on those organisations in terms of any fees they can charge, the share of the business they can require or any other criteria they can set. Organisations which provide third party sponsorship under the Tier 5 GAE route, such as the Tier 5 Intern scheme, are not restricted in terms of the fees they charge/the criteria they can set by the Home Office (or via the fee regulations) -but the stakes are very different.
Once the endorsing body has given the applicant its seal of approval, it must keep in regular contact with the applicant and make reports, where required, to the Home Office. There’s nothing in the guidance that requires endorsing bodies to carry on as an endorsing body if it finds the obligations and administrative burdens are too onerous or the cost too high.
There’s a real risk that to enter the scheme is to place the innovator’s future entirely in the hands of a third party that seemingly has no formal accountability, in its role as an endorsing body, to any regulator or government authority. The only sanction would appear to be removal from “the list”.
Will applicants of the calibre required to even enter this scheme be willing to give up a stake in their business? Will they be willing to run the risk that the third party may decide to pull out of acting as an endorsing body altogether, or may refuse to continue to endorse the innovator if there is a disagreement about the business, meaning an end to their ability to remain in the UK to grow their business?
With the current situation in the UK, these kinds of entrepreneurs is what we need. People who have their eyes set on the future. Many countries want to attract someone who can demonstrate that they can create jobs and opportunities for resident workers, suppliers, etc.
The most pressing issue is that the innovator route in its current state just doesn’t seem to be fit for purpose!
If you require more information relating to immigration, please contact Misbha Ali
Misbha Ali – Residential and Commercial Property/Immigration
T: (0)20 8866 6464
The Sethi Partnership Solicitors I The Barn House I 38 Meadow Way I Eastcote I Ruislip I Middlesex I HA4 8TB
Please note that whilst we take every reasonable endeavour to ensure that the information and commentary is up-to-date and factual, any information or commentary is for information purposes only and is provided free of charge. Any opinions expressed are reserved and entirely those of the author. There is no assumed liability by The Sethi Partnership Solicitors, its employees or principals as to the contents and its correctness or accuracy, or for any consequences that may follow if the content or information is relied on.
The content, information or opinions expressed do not, and are not intended to, constitute legal advice by any means. If you require advice, we strongly advise that you speak with a specialist lawyer or legal advisor who is authorised to provide you with legal advice on your particular matter and not to rely on any commentary of information on this site.
“This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.”