It has come to our attention that some providers are failing to provide clients with accurate advice and are involving them in dubious investment schemes that result in the Home Office refusing to renew theirs status, thus jeopardising the applicant and his family’s stay in the UK.
Appearing deceptively simplistic, the Tier 1 (Investor) visa category is, in fact, rather intricate. Contrary to popular belief, this visa does not amount to the right to reside in the UK granted in exchange for monetary investment. After obtaining indefinite leave to remain (“ILR”) the investors are free to withdraw and use the invested funds as they see fit. However, to get to that stage the investor needs to comply with a number of conditions, which are far from straightforward. In addition, these requirements are being constantly altered and clarified – not only by the Home Office, but by the courts as well.
Apart from the most substantive changes (such as raising the minimum level of investment to £2 million five years ago and abolishing Government bonds as suitable investments in Spring 2019), the Home Office and the courts frequently introduced other clarifications, which do not seem quite as sensational. These are the most dangerous, however, and whilst they can easily go unnoticed, non-compliance with them can result in investors being unable to extend their visas and obtain settlement in the UK.
For instance, a clarification restricting the kind of investments allowed under this immigration route has recently been provided by the judiciary. The Upper Tribunal upheld the Home Office’s refusal to extend the Tier 1 (Investor) visa for one applicant and to grant ILR to another, due to the invested funds not being under their “complete and unfettered” control.
Both claimants used funds borrowed from one company to invest into another. It should be noted that this is officially permitted under the Immigration Rules for applicants who were granted initial leave in this category before 6 November 2014. The claimants also had a legal right to move their investment funds into a company of their choice and were entitled to redeem their shares in the company in which they invested. However, despite the fact that these investments were seemingly made in accordance with relevant requirements, the tribunal inter alia concluded that in reality, the investors did not freely choose to invest their funds into that particular company, but were required to do so by an agreement with the lender. This line of reasoning stems from the fact that the company lending the money to the claimants was very closely connected to the entity which the applicants then invested in. This corporate structure seemed to be created solely for the purpose of obtaining investor visas. Whilst creating or using such schemes is not prohibited in itself, this kind of investment turned out to be insufficient to satisfy the Tribunal’s definition of control over the funds in “its natural and ordinary meaning”.
Furthermore, the Tribunal noted that the claimants relied on funds that were used for investments outside of the UK. The company that held the funds was deemed not to be an “active and trading UK company” as required by the Immigration Rules, but an “open-ended investment company”, which Tier 1 (Investor) Migrants are not allowed to invest in.
There has not previously been such a clarification of the rules for the Tier 1 (Investor) visa regarding the utilisation of investment funds. We can see that the Tier 1 (Investor) visa requirements are being made increasingly restrictive, with the effect that the current version of this visa category bears little resemblance to the original one. The most worrying aspect of this is the unpredictability, as migrants relocating to the UK expect certainty and stability within the rules and regulations that govern their right to remain in the country.
There is no doubt, however, that the category will continue to undergo further changes. For example, it has been repeatedly suggested that the Home Office may introduce a wealth audit requirement to address money laundering concerns. Besides, the proposed major 2021 immigration reform will bring fundamental changes to the immigration system as a whole and, as a result, will further alter the investor visa as we know it today.
Gherson does not offer investment advice and any investment choice must be made by the applicant in conjunction with independent financial advice
Gherson has very extensive experience in supporting applicants through all stages of the Tier 1 (Investor) immigration route. If you would like to discuss your current situation and options in relation to this visa category, please do not hesitate to contact us.
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.
©Gherson 2020
Paralegal in our Complex Case team
Further Reading
Tier 1 Investors Pre 29 March 2019: The Rules on UK Government Bonds