Open for business? Britain’s constricted immigration pathways for entrepreneurs

13 Nov 2023

Success begets success, we are led to believe, so you can imagine the tone of bafflement when I explain to my serially successful entrepreneur client that the UK immigration system may not be getting the red carpet out for her arrival and, in fact, any route in isn’t as simple as it once was.  She is, like many in her position, incredulous that her proven track record of job-creation and wealth-generating dynamism is not immediately welcomed, coveted, or even, as it seems, accommodated.

No more golden visas

Up until February last year she could have invested £2 million pounds of her capital in the UK by way of share or loan capital in active and trading UK-registered companies under a points-based Tier 1 (Investor) route which would have allowed her to start up her own companies or work with her existing companies, or devote her abundant energies to more or less whatever endeavour she wished, as well bring her partner and dependent children with her to the UK.   For those who could afford it, it was an inviting landing path, offering substantial flexibility, including accelerated routes to settlement for those wishing to invest £5 million or even £10 million.

The route underwent a series of tweaks to address well-publicised concerns regarding the source of applicants’ funds and the suspicion that certain individual’s wealth was amassed from the proceeds of crime or corruption.  Over the years these measures were quite effective and incorporated the UK banking system conducting background checks as applicants were required to open UK bank accounts.  The route remained one of the most popular visa categories for wealthy individuals who wanted to relocate with their family to the UK.  However, the route was abruptly shut down to new applications, without warning, days before Russia invaded Ukraine, on 17 February 2022.  The explanation given was to prevent the movement of illicitly obtained wealth into the UK as well as general national security concerns.  Though by this stage, China, not Russia, was the country from which most applicants were coming.  There is no replacement for this route.

Entrepreneur visas

The obvious category for my client was in fact closed to new entrants three years earlier at the end of March 2019.  The Tier 1 (Entrepreneur) route allowed applicants to set up, join or take over a business or businesses in the UK as a sole trader, or within a partnership or a UK-registered company structure.  It led to settlement after five years with one of the criteria being evidence of job creation.  The route went through several iterations mainly to address perceived concerns that people (especially those on post-study work visas) were using the route for their own employment rather than to set up businesses to create employment for others. The key change was the introduction of the ‘genuine entrepreneur test’, the results of which would be difficult to ascribe to the law of unintended consequences.  The test required Home Office caseworkers decide on the viability of applicants’ business plans, which turned a tick-box exercise into a discretionary-based one, with the attendant aleatory results and high levels of arbitrary refusals. Despite all this, even in its last year 3,342 visas were issued according to the Home Office’s fact sheet. It was a much-used, if rather frustrating, route.

The ill-fated Innovator visas

The successor route provided for entrepreneurs wishing to settle in the UK was the Innovator route which was often described as ‘not fit for purpose’, but that depends on what the purpose is.  In a letter to the Immigration Law Practitioners Association, dated 4 April 2019, the Home Office confirmed that while there was no limit on numbers, it expected to grant fewer visas under this route than the one it replaced.  And in this respect the Home Office succeeded. To return caseworkers to non-discretionary points-based processing, it introduced third party endorsing bodies which were critical to the applicant’s success, but had their own agenda and could withdraw endorsement leading to the applicant’s visa either not being extended or being curtailed.  The whims of caseworkers were swapped for the whims of endorsing bodies with several layers of red tape and onerous settlement requirements added into the bargain. The take-up was pitiful, during the whole of 2022 just 299 Innovator visas were granted.

Is the new Innovator Founder visa an improvement?

The current category designed for entrepreneurs called Innovator Founder was introduced in April this year, for individuals seeking to establish a business in the UK based on an innovative, viable, and scalable business idea they have generated, or to which they have significantly contributed. Unlike the original Entrepreneur category, applicants cannot join an existing business.  Like the failed Innovator route, the first stage remains getting endorsed by a Home Office approved endorsing body which assesses applicants on their business plan and how it meets market needs, whether they have the required skills to run the business, the scope for job creation, along with evidence of access to funds.  Once endorsed, the visa application can be made, and once the visa is granted further contact points are required with the endorsing body to check progress.

It is more attractive than its predecessor, but getting the initial endorsement is itself a daunting task with a lot of administrative hurdles and little transparency which ill suits the temperament of most entrepreneurs.  In theory it is possible to qualify for settlement after three years, but the requirements for settlement on this route are perversely difficult and more complicated than any other immigration route.  Apart from the usual residence and absence requirements, the applicant is measured against their business plan in their previous endorsement and then on top of this the applicant must meet two out of seven additional criteria, such as providing evidence the number of the business’ customers has at least doubled within the most recent three years and is currently higher than the mean number of customers for other UK businesses offering comparable main products or services.  Make of that what you will, but anecdotal evidence suggests it has not been a magnet for many applicants, to the surprise of few immigration practitioners.

What other UK immigration options for entrepreneurs?

While this specific pathway for entrepreneurs is bogged down by red tape and uncertainty, there are other immigration routes which can occasionally be used to scoop up those who would previously have come to the UK under the Tier 1 (Investor) or Tier 1 (Entrepreneur) routes.  Global Talent, while not necessarily a business category, is meant to attract the “best and brightest” who show exceptional talent and promise in the fields of science, engineering, humanities, medicine, digital technology or arts and culture.  If the applicant can show they have a proven track record in building digital products and/or businesses, they may qualify under the digital technology route. Unfortunately, my client was not in the digital technology sector.

Nor had she qualified with a bachelor’s degree or above from a university on the ‘top global university’ list in the last five years.  The High Potential Individual route allows applicants with an eligible degree qualification (minimum bachelor’s level) from a non-UK ‘top global university’ in the last five years to undertake full-time employment or self-employment in the UK for two years (or three if they have a PhD).

The immigration options for our enterprising client look far smaller now than previously and this is not by accident.  Matching clients with viable immigration pathways can feel like a surreal game of 3-D Tetris. While we should be offering broad, straightforward categories, we are instead making them narrower, more complicated and less attractive.  In the end it was the simple Skilled Worker route which catered for our client.  Now that the restrictions on owning the enterprise which sponsors you have been removed, setting up a business in the UK, getting a sponsor licence and then employing her as a Skilled Worker proved the most straightforward and least risky approach – but it should not have been.