The Home Secretary’s announcement
The Home Secretary explained in her announcement to parliament when closing the route:
“The Government has concluded that arrangements for attracting investment in the migration system warrant a substantively different approach to what has gone before. It is therefore our intention that new provision for investment-related migration should be delivered through reforms to the existing Innovator route, which we expect to deliver in the Autumn of this year. This reformed offer will make provision for overseas nationals who can show they are skilled and experienced professional business angel investors, with a track record of founding and investing in innovative businesses overseas, along with access to a minimum level of funds and credible plans to engage in similar activity in the UK.
“The proposed future scheme will no longer focus exclusively on having cash in the bank and making passive investments. It will instead be focused on attracting the brightest and best through a rigorous assessment of an applicant’s business background, skills, and investment plans. This will ensure those given a visa are appropriate individuals who will genuinely bring tangible benefits to the UK economy. Settlement will be conditional on applicants achieving genuine and tangible economic impacts, such as job creation, directly through their economic activity in the UK. They will ensure the British public can have confidence those who obtain this significant privilege have genuinely earned it, rather than having bought it.
“It will be for the reformed Innovator route’s Endorsing Bodies to make an assessment of whether these criteria are met. The Government has already indicated the selection of new Endorsing Bodies to support the operation of the Innovator route will be delivered through a commercial exercise. We are taking steps to inform the market that this expansion of the scope and purpose of the Innovator route will form part of the commercial requirement as we go to tender in the near future.
“To be clear, these future arrangements will remain subject to Home Office security checks, alongside requiring appropriate checks by both the financial institutions handling applicants’ funds and by the Endorsing Body, ensuring three levels of scrutiny of each application.”
The new scheme
The innovator visa as it is today allows entrepreneurs with a new innovative business idea to come to the UK to establish that business if they are endorsed by an organisation approved by the Home Office as an “endorsing body”.
According to the statement quoted above the new proposed scheme will be restricted to those with an established track record of investment activity outside of the UK, and who intend to continue that in the UK. It requires investment in innovative business only, and creating jobs in the UK. This may arguably produce greater benefit to the UK, and greater opportunities for investors.
The sooner the UK government can set out the new plan, the better it will be for attracting investment into the UK and providing the certainty investors want.
Given that the reason for the no notice closure of the Tier 1 Investor visa was for reasons of “national security” and to avoid a “closing down sale” from some individuals who may “represent some degree of potential harm” to the UK, it would arguably have been expected that we would see particular jurisdictions banned, or subject to more stringent checks than others. Alternatively, all applicants being required to be audited by UK auditors or provide due diligence reports on their source of wealth and funds as some other jurisdictions do. As it stands, the additional level of security over the old investor scheme will be the involvement of the endorsing bodies.
What we do and do not know so far
In summary the new scheme is likely to require the following in order to obtain the initial visa:
- An established track record of investing in innovative businesses;
- A requirement to have a minimum level of funds (as yet to be determined) and probably have a UK bank account opened;
- A credible business plan to engage in investing in innovative businesses in the UK; and
- Endorsement from an endorsing body approved by the Home Office.
Extensions of this new visa, and entitlement to indefinite leave to remain will require:
- Having invested the required amount of funds in an innovative business;
- Creating jobs as a result;
- Continuing endorsement by an endorsing body;
- Satisfying an English language and knowledge of life requirement to obtain indefinite leave to remain, as currently required.
How equipped are the current endorsing bodies to do this? How involved would the investor have to be in the business? How will the endorsing body assess an applicant? How will the endorsement be linked to the investment – will the endorsing body have to approve the proposed business investment? Not to mention what level of funds will be required?
Hopefully answers will be provided sooner rather than later, so investors can start to plan. These are not decisions that are made overnight, and take months of planning and advising.
Gaps in the market
One criticism of the above new proposals is that it seemingly does not cater for those who no longer want to run businesses. If this is correct, there will be no UK scheme that caters to retired persons of independent means, who do not wish to work in the UK. Nor does it cater to divorcees who haven’t perhaps worked for some time, or younger applicants, children of the wealth generator, who may want the flexibility to work/not work that the investor status brings.
We will update our website as we know more.