The £200,000 Investment Requirement Under the Tier 1 (Entrepreneur) Visa Category

One of the main requirements for a Tier 1 (entrepreneur) visa under the UK Immigration Rules relates to the investment funds required for which there are two separate categories.

The first category requires that you hold a minimum of £200,000.00 of disposable funds which can be your own funds or third-party funding. The funds in this category takes into consideration any funds already invested in the UK either by the Applicant or by the third party.

The second category allows you to make an application for a Tier 1 (entrepreneur) visa if you have £50,000 however, this only applies if the investment funds are from an FCA registered UK venture capital firm, UK seed funding competition or a UK government department.

The most common form of investment for the Tier 1 (entrepreneur) visa is the £200,000 investment. Currently, paragraph 245D (c) (i) of the Immigration Rules stipulates that the funds are either:

“(1) in the applicant’s own possession,

(2) in the financial accounts of a UK business which he is running as a member of a partnership or as a director, or

(3) available from the third party or parties named in the application…”

In order to demonstrate that this requirement is met, you will need to show bank statements in a specific format and various other documents prepared by a qualified accountant. At the initial application stage, you will only be required to evidence that the funds are available to you. Once a migrant has reached the extension stage of the application, the Immigration Rules will require the migrant to have invested the funds directly in the business by the end of the three year period as the initial grant of a Tier 1 (entrepreneur) visa is valid for three years.

How do you ensure that the £200,000 is invested correctly under the Tier 1 entrepreneur category?

According to the most recent Tier 1 Policy Guidance published by the Home Office in April 2017, the term invested requires migrants to have spent the funds directly on the business which they have ran as self-employed person or as a Director. The Policy Guidance at page 19 further states that funds will not be considered to have been invested or spent if the funds were spent on:

1. 1. the migrant’s own remuneration
2. 2. buying the business from a previous owner, buying the business from a previous owner, where the money ultimately goes to that previous owner rather than into the business you have bought
3. 3. putting money into businesses, other than those which you are running as self-employed or as a director, and
4. 4. any spending which is not directly for the purpose of establishing or running your own business or businesses.

This may cause several issues for entrepreneurs and their businesses as the Immigration Rules do not provide a specific list of how the funds should be invested to satisfy this requirement.

What are the issues that Tier 1 (entrepreneur) migrants may face with the £200,000 investment?

The first issue may only be applicable to small business with low overheads as business such as this may not necessarily require an investment of £200,000 to be successful. Moreover, the Immigration Rules also state that you must have created at least two positions during the three year period, this requirement again does not take into account small businesses. You are only required to have created two positions and not more and combining this with low overheads, could potentially mean that the £200,000 investment can simply not be met. Consequently, a Tier 1 entrepreneur migrant will not be able to meet the requirements for an extension of leave.

In addition to the above, forcing certain businesses to invest the above amount in order to meet the requirements for an extension of a Tier 1 (entrepreneur) visa when it is not needed by the business can easily cause cashflow issues for the business in the near future. Cashflow problems could mean that directors or self-employed persons are unable to meet their business responsibilities on a day to day basis because of the lack of capital available to them. This could in turn potentially mean that the business will not only struggle financially but will also find it difficult to continue to provide their services to their customers/clients.

The issue with the current UK Immigration Rules is that it fails to explicitly specify what type of spending will be deemed to have been spent directly for the purpose of running the business. The Tier 1 Policy Guidance published by the Home Office similarly fails to define what the Immigration Officer at the Home Office will ideally look for or how detailed their assessment of the business accounts will be.

The evidential requirements may also not allow for a clear demonstration of the funds being invested correctly and directly into the business nor has the Home Office given any indication as to how an Immigration Officer will ascertain and confirm that the £200,000 has entirely been invested.

In circumstances where the Immigration Officer is unable to ascertain the above, he/she may request further documents however, the type of documents that could be requested are not disclosed. It is therefore difficult for migrants to know beforehand if they will be able to provide such documents within the short deadlines imposed by the Home Office. This does not allow migrants to prepare themselves for a further request of documents and if the deadline cannot be met, the application is likely to be refused.

Conclusion

The Immigration Rules have always been ambiguous and yet extremely detailed especially for the requirements of a visa under the Points Based System. The Immigration Rules for a Tier 1 (entrepreneur) visa are no different and with the Policy Guidance lacking clarity, the risk of receiving a refusal is increased considerably. The preparation of a Tier 1 Entrepreneur Visa application must be undertaken in a meticulous and thorough manner to ensure that application is successful.

If you require assistance and advice in submitting a successful Tier 1 (entrepreneur) application, please contact our specialist and highly experienced business immigration team on 0203 959 9123 to discuss your case in detail.