The Tier 1 (Investor) Visa Scheme - Rumours of its suspension greatly exaggerated
We understand from media reports today that the Migration Policy team at the Home Office has indicated that the Tier 1 (Investor) visa “is not currently suspended”. The team apparently also explains that “the Government remains committed to reforming the route. A further announcement will be made in due course. Any suspension would be implemented through changes to the Immigration Rules.”
When we contacted the Home Office yesterday for confirmation of the position, we were told that, until a suspension is announced on its website, we should assume the Tier 1 (Investor) Visa scheme remains open for applications. This is supported by the Migration Policy team's statements reported today.
In its announcement regarding this issue, the Immigration Law Practitioners’ Association commented that the situation, “makes a mockery of the principles of certainty and stability inherent in the rule of law”, sentiments with which we would concur. We are continuing to monitor the situation, but it seems for now business as usual for the Tier 1 (Investor) Visa. Any applications for it currently being prepared should be submitted at the earliest opportunity before any possible suspension and/or changes come into effect.
What happened?
According to media reports on Thursday 6 December, the Home Office announced on Wednesday night that the Tier 1 (Investor) Visa scheme was to be suspended from Friday 7 December ahead of proposed reforms to tackle money laundering and organised crime. There was a lack of clarity at the time whether the suspension was to have taken effect after 11.59pm on Thursday 6 December or at midnight
on Friday 7 December, although the consensus within the industry was that the change took effect on Thursday 6 December.
What is the Tier 1 (Investor) Visa?
The Tier 1 (Investor) Visa was originally introduced to encourage wealthy people from outside the EU to invest and eventually settle in the UK. Among other requirements, an applicant has to invest at least £2 million in certain qualifying UK investments. These include UK government bonds, share capital or loan capital in active and trading UK registered companies. Investment in property investment, management or development companies is not permitted. An investment of £2 million or more allows an individual to apply for indefinite leave to remain after five years, an investment of at least £5 million reduces that period to three years and an investment of at least £10 million reduces it still further to two years.
What reforms are proposed?
We understand that the proposed reforms to tackle money laundering and organised crime include the introduction of an audit process, involving a detailed audit of an applicant’s financial and business interests. Such applicants will also be required to show they have retained control of the investment funds for at least two years rather than three months as at present. Under the existing rules, if you have not held the funds for at least three months, an alternative is simply to provide evidence of the source of funds. It will be interesting to see if this option also applies under the new rules. A further change will be to remove UK government bonds as an investment option. This has been found to be a popular investment for applicants but brings few advantages to the UK economy.
What next?
Significant changes were made to the Tier 1 (Investor) Visa requirements in November 2014 that sought to improve transparency and vetting of visa applicants. The proposed new changes appear to be an unnecessary duplication of those changes. The principal change in 2014 requires applicants to open a UK bank account for the purposes of investing in the UK under the visa before making an application. Applicants now need to go through banks’ anti-money laundering checks to open the account. If they fail those checks it is impossible to open an account and, accordingly, also impossible to apply for a visa.
The changes in November 2014 also require applicants to obtain Overseas Criminal Record Certificates from any country they have continuously or cumulatively lived in for 12 months or more in the 10 years prior to applying.
These changes were clearly designed to tackle money laundering concerns, and, as such, it is a surprise that there is thought to be a need to make further changes for the same purpose.
Furthermore, given the constant refrain in advance of Brexit that the UK is “open for business”, last week’s announcement of a suspension of the Tier 1 (Investor) visa scheme and the subsequent back-tracking is likely to be counter-productive, creating an impression of uncertainty and instability at best. In recent years, the UK has outwardly emphasised its commitment to being a welcoming environment for investors from around the world, while at the same time increasingly introducing tax and regulatory legislation that in practice has made that environment increasingly hostile. The further changes proposed to the scheme are unlikely to change the perception that exists in some quarters of a country that is becoming increasingly isolationist.
In any event, individuals wishing to come to the UK who have not yet submitted an application under the scheme, may wish to do so now before any suspension is, in fact, introduced, or changes are made to the existing applications procedure. If you would like to review the options available to you, please do get in touch.