The abolition of the Entrepreneur visa category
29 March 2019 saw the demise of the Entrepreneur visa. After several decades it has been abolished. It created thousands of jobs and a variety of businesses, but there are those at the Home Office who thought it was the subject of major abuse. The abuse that took place occurred largely because the visa was never meant to be a points based scheme. It was squeezed into that category, however, and by the end was there in name only because the original precepts were brought back and the applications dealt with by interview.
Those who have Tier 1 Entrepreneur visas will be able to extend them until 6 April 2023 and applications for Indefinite Leave to Remain can be made until 6 April 2025. In addition it should be noted that applicants applying for Entrepreneur extensions from abroad will now be granted leave for 2 years.
A word of caution: in a recent case the Court of Appeal stipulated that the requirements for the commencement and renewal of Tier 1 Entrepreneur visas needed to be strictly adhered to. Those in possession of a visa in this category would therefore be well advised to ensure strict compliance with all the requirements and all the specified documents for their applications.
Gherson has been slow to add the new Start-up and Innovator visa categories to its website because they do not seem to be fully developed and changes will no doubt be introduced as these categories are gradually rolled out. The advice given is at times imprecise because it is only through practise that the boundaries of the new rule will become clearer. Some advising on the topic are professing an expertise which does not exist.
The Introduction of Start-up and the Innovator visas
The new era has heralded the creation of the Start-up and Innovator visas. Who are they for, what are they and how do they operate?
Who are they for?
The Start-up and Innovator visa categories are for non-EEA nationals wishing to set up a business in the UK. However it is not just any business – as was the case with the previous Entrepreneur visa (which only restricted investment in property).
The new categories are far more restrictive by their very nature in that they require the approval of an Endorsing Body. That in itself means that the prospective applicant must first establish which Endorsing Body to apply to and in what category.
The Start-up Visa
The Start-up category is for early-stage but high potential entrepreneurs who are starting a business in the UK for the first time.
What does the applicant need?
– Endorsement from an Endorsing Body.
– No funds are required for investment in the business but maintenance for the applicant and their dependants must be shown.
What does the Endorsing Body Look for?
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Innovation |
Viability |
Scalability |
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Does the applicant have a genuine, original business plan that meets new or existing market needs and/or creates a competitive advantage? |
Does the applicant have, or are they actively developing, the necessary skills, knowledge, experience and market awareness to successfully run the business? |
Is there evidence of structured planning and of potential for job creation and growth into national markets? |
At first sight these are quite vague criteria. The Home Office has offered Endorsing Bodies some guidance as to what to look for:
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Innovation |
Viability |
Scalability |
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Is the business offering something more than merely competing with similar local traders?
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Is there evidence of market research? |
Is the business likely to gain sufficient traction? |
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Is there a need for the business in the UK market that is not already being fulfilled?
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Does the applicant have realistic, sustainable, product goals? |
Is it a business with a potential for growth? |
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Is the idea bringing something new to the pre-existing UK/global business market? |
Is there a long-term plan for the business? |
Would this business successfully scale to be a part of the national market? |
Can the successful applicant work to support themselves?
Applicants are required to spend the majority of their time developing their businesses but can also take on other work outside of their businesses in order to support themselves.
How long is the visa granted for?
The category offers a one-off visa for 2 years.
What happens after 2 years?
The successful Start-up applicant can apply to the relevant Endorsing Body to confirm the progress of their project and to confirm that the applicant has demonstrated enough progress to meet the Innovator – same business criteria (see below). In this case the Start-up applicant will transform into an Innovator applicant but with one important proviso – they will not need to demonstrate the availability of the £50,000 (see below).
The Innovator Visa
The Innovator category is for more experienced businesspeople seeking to establish a business in the UK.
What does the applicant need?
– Endorsement from an Endorsing Body.
– The criteria for this type of endorsement are similar to those for the Start-up category, although we expect successful applicants to be assessed in line with their greater levels of skill and experience. The applicant’s endorsement letter must confirm that the Endorsing Body has assessed the applicant’s business proposal against the following key criteria:
Endorsement criteria: Innovator – new businesses
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Innovation |
Viability |
Scalability
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Does the applicant have a genuine, original business plan that meets new or existing market needs and/or creates a competitive advantage? |
Does the applicant have the necessary skills, knowledge, experience and market awareness to successfully run the business? |
Is there evidence of structured planning and of potential for job creation and growth into national and international markets? |
Applicants will usually need a minimum of £50,000 available to invest in their business, which will need to be verified by the Endorsing Body. (Note that this funding does nothave to come from their endorsing body, although some endorsing bodies may choose to offer it).
In addition, the applicant will need to demonstrate maintenance funds for themselves and their dependants.
How long is the visa granted for?
Successful Innovators will be granted leave for 3 years at a time and can bring their family members to the UK. After 3 years, Innovators can apply to extend their stay for a further 3 years or to settle permanently in the UK. Each of these 3 stages (initial application, extension, settlement) requires endorsement from an Endorsing Body.
Can the successful applicant work to support themselves?
Innovators must work entirely on developing their business ventures and may not take on other employment outside of their business. This includes anything which effectively amounts to employment, such as using their own business to hire out their labour to another employer.
Although the Endorsing Bodies have been nominated, so far very few of them, if any, are actually geared up to scrutinise and endorse projects.
Gherson can assist with preparing applications in both the Start-up and Innovator categories and in conjunction with specialists assist with making submissions to the relevant Endorsing Bodies. Do not hesitate to contact us, send us an e-mail, or alternatively, follow us on Twitter, Facebook, or LinkedIn to stay-up-to-date.
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 2019