Private wealth legal teams have welcomed the UK Home Office’s decision to reform the Tier 1 (Investor) Visas and introduce two schemes for skilled business people, as the country bids to attract more international talent post-Brexit.
This news comes months after the Home Office was slammed for scrapping and then u-turning its decision on so-called ‘golden visas’.
Geoffrey Todd, partner in the private wealth practice at law firm Boodle Hatfield, said: “The changes to the investor visa scheme will provide welcome certainty for overseas high net worth individuals (HNWIs). There had been concerns that the scheme would be scrapped, which would have been a shame.
“These changes keep the investor visa scheme attractive to the sort of HNWIs the UK wants to attract, while tightening up the requirements.”
Tier 1 crackdown
The golden visa reform will protect the UK from “illegally obtained funds”, according to the Home Office.
The scheme had come under fire for money laundering and organised crime issues; which led firms like Quilter Cheviot, the discretionary fund management arm of Quilter, to close its Tier 1 Investor Visa business to new clients.
The Home Office is looking to separate money launderers from “genuine investors”, who should have access to a viable visa scheme.
Immigration minister Caroline Nokes said: “What we will not tolerate is those who seek to abuse our system and that is why I am bringing forward measures which will make sure that only genuine investors, who intend to support UK businesses, can benefit from our immigration system.”
The visa has been available to those with access to at least £2m ($2.61m, €2.33m) to invest in the UK from outside the European Economic Area (EEA) and Switzerland.
Applicants will be required to prove that they have had control of the required £2m for at least two years, rather than 90 days, or provide evidence of the source of the funds.
The reformed Tier 1 investor route will also exclude investments in government bonds, meaning the scheme will only be available to those who invest in UK businesses.
Changes greeted with enthusiasm
Rose Carey, partner at law firm Charles Russell Speechlys, said: “In reality, investors already have to provide a comprehensive source of wealth evidence to the banks and so this change just means that they will need to provide the information at an earlier stage in the application.
“UK banks will need to confirm they have conducted know-your-client (KYC) and due diligence (DD) checks when opening the UK bank account for the investor, but these checks are something the bank has to do anyway as part of its FCA regulation.
“The changes to the qualifying investments will be greeted with enthusiasm by most investors. Many would actually prefer to invest in other types of investment than gilts, but the current system does not make this easy.
“Gilts generate little return for investors, and once fees and charges are taken into account, investors will often be in negative territory.”
She continued: “The Tier 1 Entrepreneur visa has increasingly become very difficult for genuine entrepreneurs to navigate. Convoluted requirements, for example requiring an independent lawyer to verify the signature of the bank official signing a letter to confirm funds in the account, have made it a tricky process.”
Paddy Blewer, director of public relations at global citizenship and residence advisory firm, Henley and Partners, told IA: “We have, for many years, argued that the UK should look to create more value out of its unique position in global markets.
“There is, and will always be, significant demand for this product. In the post-Brexit environment, it is important that the UK remains open to the best and brightest who can help to grow the economy, provide new employment and create value for British society.
“At the same time, DD/KYC are the most important issues that face any sovereign state managing an investment migration programme and we welcome any moves that will enhance the security of the UK economy.”
Visa routes
The two newly-created routes – the Start-up Visa and Innovator Visa – will open on 29 March 2019, when the UK is (currently) set to exit the EU.
The Start-up Visa scheme is intended for those starting a business for the first time in the UK. Replacing the existing Tier 1 Graduate Entrepreneur route, it will be for all people rather than just recent graduates.
A key change is that entrepreneurs will have double the amount of time – two years rather than one – to make their business a success before needing to make any more applications.
The Innovator Visa scheme is a path for more “experienced business people” with the funds to invest in their business, but they will only need £50,000 to invest rather than the £200,000 currently required under the Tier 1 Entrepreneur route.
After three years they will be able to apply for settled status if their business has succeeded.
Philip Barth, head of immigration at Irwin Mitchell Private Wealth, said: “This is a welcome move from the Home Office, but as always the devil will be in the detail – and the date on which these visa routes are to be implemented will not go unnoticed.
“The lowered threshold for entry level across both routes will definitely encourage more international businesspeople to set up shop in the UK. The move to use endorsing bodies and business experts to assess applications is also a positive one.
“The Home Office must be careful to avoid placing too much emphasis on innovation to the detriment of traditional, but viable business models; as while the new and exciting businesses are important to the UK remaining a world-class financial centre, so are the ‘everyday’ ventures.”
