Changes
ahead for
Tier 1 (Entrepreneur)?

10 November 2015

Eight months after its commissioning, the MAC has advised the government of the substantial changes it feels should be made to the Tier 1 (Entrepreneur) entry route.

With only 5,488 visas issued under the Tier 1 (Entrepreneur) route in 2014, the Migration Advisory Committee (MAC) was specifically asked to consider how this route could deliver greater economic benefit to the UK and more closely align with the business life-cycle, whilst at the same time guarding against abuse of the route.

Substantial analysis and research including the collection of evidence from corporate partners, has led the non-departmental public body to publish a number of recommendations which could markedly alter the outer and inner workings of the Tier 1 (Entrepreneur) visa.

MAC recommendations:

• The government should make the exact purpose of the Tier 1 (Entrepreneur) route quite clear.          For example, is the objective to create jobs or to boost innovation and productivity? The MAC sees the benefits in recognising that the route aims to attract entrepreneurs with innovation and scalable business propositions.
• Third party endorsement should be introduced to a far greater extent within the application process. It could replace the current genuineness test and allow UK Trade & Investment (UKTI)-approved accelerators to endorse individual applicants (graduates and non-graduates) for a limited number of visas.
• The government should use industry experts rather than civil servants to conduct the genuine entrepreneur test for those applicants who do not have the endorsement of a third party.
• The current investment threshold of £200,000 should continue to apply to those entrepreneurs without any third party endorsement so as to deter speculative or low quality applications. Whilst the reduced £50,000 investment threshold (from certain specified sources) is satisfactory, the MAC feels it could be further lowered to reflect low start-up funding requirements in some innovative sectors.
• The Home Office should consider expanding its network of approved third party endorsers. The MAC has suggested that the government could work with UKTI and the UK Business Angels Association to explore the feasibility of approving selected angel investor networks or syndicates to provide third party endorsement.
• Applicants should provide evidence of an entrepreneurial track record as part of the Home Office assessment of the early-stage business case, along with work experience and any skills or qualifications the applicant may have which are directly relevant to the business venture that they wish to pursue. Less emphasis should be placed on assessing the genuineness of the business plan.
• Tier 1 entrepreneurs should be required to regularly report back on the progress of their business in order to demonstrate the activity they are carrying out to grow their organisation.
• Graduate entrepreneurs should receive permission to remain in the UK for two years in order to allow time for their business to get off the ground. Currently, migrants on the Tier 1 (Graduate Entrepreneur) visa are initially given only one year’s leave to remain in the UK.

The MAC recommendations offer a rational and common-sense approach to the reshaping of this visa entry route.

Such reform would benefit UK residents, as this selective route would encourage fewer but higher-quality applicants to apply.

With refusal rates currently running at 48 per cent, it is fair to say that potential entrepreneurs will eagerly anticipate news of which suggestions the government intends to adopt and how the Tier 1 (Entrepreneur) visa category will look in 2016.

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