The recent changes to UK immigration rules are set to ensure the UK remains a world-leading business destination. Yet, these amendments have proven contentious. Citywealth’s April French Furnell spoke to City immigration lawyers to get their views on the ups and downs of the mainly, tech’ related legal developments.
The most talked about and exciting new visa’s, are called The Innovator and Start-up which replace the Tier 1 Entrepreneur investor visa. Having entered into effect on 29 March 2019, Laura Devine, of Laura Devine Solicitors, a boutique immigration firm in the UK and New York, says, however that “applicants are finding it difficult to navigate the new system”.
To recap, the previous system was tricky and seemed arbitrary, explains Julia Jackson, an immigration partner at Wedlake Bell. “The Tier 1 Entrepreneur route, which is now closed, was overly long, badly organised and often confusing even for specialist immigration solicitors. Civil servants judging business plans and finances for viability against subjective criteria frequently resulted in surprising decisions which led to a refusal rate of around fifty per cent of all applicants. To the immigration industry, it was clear that the visa was not fit for purpose”, she explains. Despite the developments in the new Innovator Route visa, Jackson says, “it is, a new minefield for potential applicants and only the bravest or most determined are likely to step in”.
One of the key changes is that all new businesses must be approved by an endorsing body of which there are around twenty who are seed funding and venture capital firms, “with much more experience than Home Office caseworkers who were previously tasked with the job”, explained Devine. “The trouble with this approach is that each endorsing body sets their own criteria as to which businesses they choose to approve. They may stipulate involvement in a sector or region where the endorsing body is able to take equity in the new venture. Many of the currently approved endorsing bodies are not yet open for applications and it is up to each potential innovator to work through each body one by one to see which, if any, will be suitable for the planned business”, said Jackson.
Bigger plans are better
What’s more, the late announcement of the bodies and lack of information surrounding their processes and general code of conduct, “has left many prospective entrepreneurs unable to apply. It is likely that it will take another few months until everyone is fully operational”, said Devine. "A further risk,” adds Jackson, “is that the current list of endorsing bodies has a new focus on scalability that many innovators or start up’s will not be able to demonstrate in their business plans”.
Right to live in the UK
Another amendment is the ability to claim an indefinite right to live in the UK after a qualifying period of residence of just three years, rather than five. However, “the multiple-choice approach to qualifying criteria where applicants must meet at least two criteria from a menu of seven, is seen as problematic. For example, one section specifies that the business must have engaged in ‘significant R&D or research and development and applied for intellectual property protection’, not something that is necessary for all businesses. Another choice is that the number of customers the business has is ‘more than the mean number of customers for other UK businesses offering comparable core products and services’”, which, Jackson says, “it makes me wonder, who will be providing details of customer numbers against which this can be assessed?”.
Look fear in the face
Offering her final thoughts, Jackson believes that the effect of the new rules will “reduce the number of overseas investors moving to the UK” and that the “current rules may only be attractive to confident risk takers or the naïve”.
Dreams are free
As for the Start Up route which replaces the The Tier 1 Graduate Entrepreneur route, it introduces a “number of welcome changes including a longer period of initial leave which is now two years; no investment threshold; and applicants no longer need to be recent graduates in order to qualify”, explains Devine. “As with The Innovator route, Start-up applicants will need to receive an endorsement from a designated body.”
Pat Saini, Penningtons Manches’ head of immigration and chair of the Tech London Advocates (TLA) immigration working group, has been amongst those making the case for the UK to introduce both a start-up visa and endorsement by approved third parties. Commenting on the new visa’s and criticism about their ease of use, she refutes this and says, “The tech’ sector will welcome the announcement. It has long been lobbying for more ‘fit for purpose visas’, allowing endorsements from third party experts and business leaders is seen as a step in the right direction. These changes will also help in the post Brexit era.”
One at a time
However, Roger Gherson, partner at Gherson Solicitors, throws another spanner in the works, digging further into the specifics of the law. He believes the ‘Academic Progress rule’ for foreign students will be a major roadblock. The current system only allows students visas to study one degree at undergraduate level. In his view, students are increasingly interested in studying an English degree and a separate Law degree, or a Math’s degree followed by a Chemistry degree, to increase their knowledge and potentially help with their own entrepreneurial business ideas. The Academic Progress rule requires that a new course must be above the level of the previous course, for example from a bachelor’s degree to a masters, or a masters to PhD level. Gherson reports having had clients come to the firm looking to pursue two undergraduate degrees and as a result having to move to the US to achieve this. Gherson questions this type of policy. He says, “This is very personal and something this individual will remember for the rest of his or her life”, He continues, “There is still time to amend this to attract more of the ‘best of the best’ who want to pursue their continued education in the UK, some of whom will be the captains of foreign industries whose loyalty and cooperation is essential to the UK’s economic survival.” He adds finally, “Most MPs are undoubtedly, unaware this rule exists”, explains Gherson.
In the short term, many problems are being foreseen, but in the long term, the belief is that hiccups will iron out as industry bodies get up to speed. Whether or not this will provide Godspeed though, only time will tell.