Tier 1 (Entrepreneurs): working 9-5?
Tier 1 (Entrepreneurs) must ‘genuinely operate their business’. But what does that look like in terms of time commitment?
The immigration rules and guidance relating to Tier 1 (Entrepreneurs) do not spell this out.
Whilst some entrepreneurs spend every waking hour working on their venture(s) and developing their business, there are others – especially those who have joined an existing company – who might not need to.
The individual – and their investment, and/or expertise – may have been brought in for development of a specific business service strand, or delivery of a particular project.
Strictly speaking, there is no guidance on how much time a Tier 1 (Entrepreneur) visa holder must spend developing his or her business.
Interestingly, though, and although I have never had a client who has tried this, it is possible to study degree level courses whilst in the UK with leave as a Tier 1 (Entrepreneur) (see guidance, p.117), which suggests that not every hour of every day needs to be spent developing the business.
However, one imagines that studying a time-intensive course might cause raised eyebrows at the Home Office when the Tier 1 (Entrepreneur) comes to extend their visa and consideration given as to whether or not they are ‘genuinely operating their business’.
Which brings us to the two areas of risk for a Tier 1 (Entrepreneur) who does not spend the majority of his or her time on their business: one old, and one new.
The old: ‘Genuine entrepreneur test’
The main stumbling block for part-timers has traditionally been - and continues to be - the extension-stage genuine entrepreneur test. The guidance states
Migrants making an extension application are subject to a genuine entrepreneur test.
You must be satisfied that the migrant:
- *has established, taken over or become a director of one or more genuine businesses in the UK, and has genuinely operated that business*
- has genuinely invested the money referred to in table 5 of appendix A into one or more genuine businesses in the UK
- intends to continue operating one or more businesses in the UK
- does not intend to take employment other than under the terms of paragraph 245DE
You must take into account the following:
- the evidence they submit
- the viability and credibility of the source of the money referred to in table 5 of appendix A
- the credibility of the financial accounts of their business or businesses
- the credibility of their business activity in the UK
- the credibility of the job creation for which they are claiming points
- if the nature of the business requires mandatory accreditation, registration and/or insurance, whether that accreditation, registration and/or insurance has been obtained
- any other relevant information
Could a Tier 1 (Entrepreneur) who has joined an existing company be said to be genuinely operating that business by attending a weekly or fortnightly board meeting?
Even if the value that the business derived from those meetings with the Tier 1 (Entrepreneur) was high, it is likely that a visa-holder who adopts this approach will come under greater scrutiny than one who essentially treats its development as a full-time job.
Any applicant who takes this approach is likely to need to emphasise the value of the advice being imparted, and its importance in driving the business.
The new: Appendix A, paragraph 48(c)
There has been a recent insertion into the rules – not mentioned in either guidance documents that I can see, or on the application form – which now requires those applying to extend their Tier 1 (Entrepreneur) leave to provide
(i) an overview of the business’s activity, including an explanation of the goods or services it provides to its customers or clients; and
(ii) the applicant’s job title and job description, setting out their role within the company, how they are implementing their business plan and what their main tasks and responsibilities are in running the business on a day-to-day basis
The reference to ‘day-to-day’ tasks and responsibilities seems to suggest that Tier 1 (Entrepreneurs) need to be involved on a daily – arguably full-time – basis.
The requirement to explain how they are ‘running the business on a day to day basis’ is also, curiously, tied to provision of information about how the Tier 1 (Entrepreneur) is ‘implementing their business plan’.
It is difficult to see how this sits with other activities permitted in the route: full-time study, for example, or working in other businesses that the entrepreneur has established (where no business plan would have needed to have been submitted to the Home Office).
What of the Tier 1 (Entrepreneur) who has successfully set up a company, invested his or her funds and otherwise meets the remainder of the extension requirements after two years in the UK, and has moved on to other ventures (as entirely permitted by the rules), no longer taking a hands-on role in the original business? What if they’re kicking back at the time of the extension application, thinking about their next move?
This new provision may cause that entrepreneur difficulties at the extension stage.
What to do
The safest option is for Tier 1 (Entrepreneurs) to spend the majority of their working time developing the business idea originally pitched to the Home Office (i.e. in the initial Tier 1 (Entrepreneur) application).
We advise our clients to keep a record of what their day-to-day business activities consist of, and to touch base with us if they will be spending a period of time away from the business idea upon which they were granted entry.
For more practice notes see our Tier 1 (Entrepreneur) page.