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MAC Calls for Overhaul of Entrepreneur Visa Route

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- By Teni Shahiean, of OTS Solicitors

In a recent report, the Migration Advisory Committee (MAC) called for an overhaul of the Tier 1 Entrepreneur Visa route, due to findings of fraud.The Chairman of MAC said this month that the dedicated Tier 1 route for investors who bought at least £2m of British assets was “absolutely not fit for purpose”. In this new report, the spotlight has been turned on entrepreneurs.

Background to the Report

It is no secret that the Home Secretary, Teresa May, has been charged with the task of reducing Immigration. However, it may come as a surprise to many that Immigration routes into the UK across the board are being targeted for reform, not just those involving refugees and Asylum seekers.

Business leaders have been vocal in their criticism of the Government’s harsh line towards Immigration. As late as last month, John Cridland, director-general of the employers' group CBI, said skilled migration had been "positive" for the UK economy, and called for the net migration target to be scrapped.

"Businesses stand ready to play their part in helping the government develop a properly managed migration system that shows that Britain is open for business," he said.

Simon Walker, director-general of the Institute of Directors, also joined in the chorus chastising Teresa May’s stance stating:

"The myth of the job-stealing immigrant is nonsense, immigrants do not steal jobs, they help fill vital skill shortages and, in doing so, create demand and more jobs.

"It is about time the Home Office stopped undermining business and our own government's efforts to secure productivity growth."

In the report itself, it states that the Home Secretary asked MAC to carry out an independent report on the Tier One entrepreneur route. According to the report, the commission was asked to consider the following issues:

“whether the existing design of the Tier 1 (entrepreneur) route is appropriate to deliver significant economic benefits for the UK and in particular whether:

a) the initial eligibility criterion of access to funds is a sufficient determinant of entrepreneurial ability and whether other criteria, for example, assessment of previous entrepreneurial activity and/or testing the purpose of the investment, should be applied;

b) the existing eligibility and extension criteria are aligned sufficiently with entrepreneurial and early stage business life-cycles, including consideration of the role angel investors and crowd-funding can play;

c) the route utilises international best practice. As part of this, the MAC is requested to consider route design and incentives to ensure competitiveness”.

A Roundup of the Positive Findings of the Report

In assessing the impact of migrant entrepreneurs on the UK economy, the report concluded:

  • According to a recent study by DueDil and the Centre for Entrepreneurs, SMEs founded by migrant entrepreneurs employed 1.16 million people in the UK, accounting for 14 percent of SME-led Employment. The report also found evidence to suggest that migrants display more entrepreneurial behaviour than the UK-born population. 17 per cent of non-UK nationals owned their own business, compared to just 10 per cent of UK nationals.
  • Migrants brought new skills and ideas to the UK, by virtue of their exposure to different cultures and working practices.
  • Tier 1 entrepreneurs contribute directly to the UK economy by (amongst other things) employing workers, investing in their business, purchasing inputs from suppliers and by paying taxes on profits and activity. They also contribute indirectly to the economy by increasing trade with foreign nations, bringing in and utilising innovation and unique skills found in their home countries and boosting competition and productivity within their sector.
  • The Graduate Entrepreneur Visa scheme is currently working well.

The Report’s Negative Findings on the Entrepreneur Visa Scheme

Despite the positive findings, the report is heavily critical of the Entrepreneur Visa scheme. Negative findings include:

  • Since 2008, 13,746 individuals have been granted Tier 1 (entrepreneur) or Tier 1 (Graduate entrepreneur) visas, but only 1,580 active companies have been set up by those granted visas.
  • The scheme was highly susceptible to abuse, for example, the report found evidence that identical business plans were being utilised by multiple applicants indicating fraud.

The MAC Report’s Recommendations for Reforming the Tier 1 Entrepreneur Visa Scheme

After conducting detailed research the report made the following recommendations:

  • A separate visa route for talented entrepreneurs looking to establish start-up businesses in the UK should be established. This should be a highly selective route should be aimed at attracting the best entrepreneurial talent available and work with the UK Trade & Investment (UKTI) to create approved accelerator programmes allowed to endorse individuals for a limited number of visas.
  • The Government should create a third party body to explore the idea of approving selected angel investor networks or syndicates to provide third party endorsement under the Tier 1 (entrepreneur) route.
  • Applicants should be evaluated by industry experts where possible, rather than public servants.
  • The Entrepreneur Visa route should aim to attract entrepreneurs with innovative business proposals.
  • Each party to a joint application should be required to meet the minimum income threshold to avoid ‘inactive’ partners gaining entry to the UK.

In a statement, the Home Office stated that they were considering the recommendations and would issue a response in due course.

Tips for Ensuring Your Entrepreneur Visa Application is Successful

Whilst we wait in anticipation to see if the MAC report on the Entrepreneur Visa scheme will result in amendments to the Immigration Rules, here are a few key ways you can ensure your current application has the highest chance of succeeding.

1. Seek professional advice

Given the fact that you need to show either £50,000 or £200,000 in investment funds, fill in complex paperwork and have a detailed business plan, it pays to have access to professional financial, business and legal advice when making your application. By doing this, you will ensure everything processes smoothly and valuable time and money is not wasted re-submitting missing or incorrect documentation.

2. Spend time on your business plan

Business plans are now mandatory for all applications under the Tier One Entrepreneur Visa. The credibility of the business plan will be checked, and the Home Office is on the look-out for plans that have been copied from the Internet, which indicate a fraudulent application.

3. Make Sure your Funds can be Traced to a Credible Source

The UK has very strict money-laundering regulations. Make sure your investment funds are in your bank account 90 days prior to applying for your Entrepreneur Visa, and you can explain exactly where they came from.

4. Have a Source of Maintenance Funds that are Separate from your Investment Funds

Make sure your maintenance funds are separate from your investment funds. You must be able to show the UK Border Agency that you can support yourself whilst you build up your business.

The Best Legal Advice for Entrepreneurs

OTS Solicitors are regarded as one of the best Immigration solicitors in London. We can assist you with your visa application and ensure it is processed quickly and correctly, so you can start building your business venture in the UK, free from the stress of Immigration concerns.

To find out how we can help you, please phone our London office on 0207 936 9960 to make an appointment to see one of our Immigration lawyers.

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