Start-Up and Innovator visas for entrepreneurs

18 June 2019
The rather complicated Tier 1 Entrepreneur visa is not yet history, but it is no longer possible for migrants to apply for initial visas under the scheme. However, those already in the system will still be able to apply for extension and settlement at the appropriate time. Bearing in mind that many Tier 1 Entrepreneur migrants are on a five-year route to settlement it looks as though this visa is going to be with us until some time in 2024.

And the associated Tier 1 Graduate Entrepreneur visa is also going to be abolished, in July 2019.

The Home Office has introduced “replacement” visas for these two categories: the “Innovator” visa (which has similar characteristics to the Tier 1 Entrepreneur visa) and the “Start-Up” visa (which has similar characteristics to the Tier 1 Graduate Entrepreneur visa). So those who want to be entrepreneurs in the UK will be looking at the possibilities of applying under these new schemes.

There are two major aspects about this that spring to the attention: (1) the new visas are in both cases a lot simpler than the Tier 1 Entrepreneur visa and (2) the assessment of business plans is carried out by private institutions/organisations, not by the Home Office - and the assessment is ongoing, not “one-off”.

Many people might in principle welcome both of these items. Tier 1 Entrepreneur applications are so complicated that they are something of a struggle. And it is notoriously the case that the Home Office was very exacting in its consideration of business plans. In some cases applicants would be interviewed by the Home Office in connection with the business plan - a daunting prospect - and be refused (sometimes unfairly) on the basis that their answers were unsatisfactory.

But, like most things in life, we have to see how things work out in practice before we get too enthusiastic. The new schemes have only been in operation since March 2019, and it is early days yet.

The Start-Up visa means what it says: it is designed for new entrepreneurs who are just starting out. Encouragingly (and unlike Tier 1 Graduate Entrepreneurs) they do not have to be graduates and, also encouragingly, they do not have to show any specific investment sum for the business. Presumably they will have to have some money in the bank because setting up a business must presumably necessarily entail some expenditure, but there is no stated financial figure for this.

So far so good but Start-Up migrants must, like the Innovators, get endorsement from somewhere. It could be a private endorsing body organisation which is on a list of Home Office-approved bodies. Or - and this is surely potentially very useful - it could be a university. As we explained above, there is no requirement for the migrant to be a graduate but, on the other hand, a student migrant who has graduated in the UK and is able to sufficiently impress their educational institution with their business acumen might be able to achieve endorsement by this route.

However, Start-Up visa status is necessarily a temporary condition: the visa is granted for two years and cannot be extended and does not in itself lead to settlement.

The Innovator visa, by contrast, is granted for three years, it can extended (any number of times) and it can lead to settlement after just three years, if specific requirements are met - not after five years, as has been incorrectly stated by some sources. But there is in many cases a requirement to show at least £50,000 investment funds.

It is possible for Start-Up visa holders to switch to the Innovator category - and this is evidently what the Home Office expects to see. The Innovator visa is, they say, suitable for “more experienced” entrepreneurs and, in this situation, the aspiring Innovator still may not need to show any specific amount of investment funds.

So the Start-Up/Innovator route looks perhaps relatively straightforward, but it is important to bear in mind that in every case a migrant applying for an Innovator visa requires endorsement from one of the specified endorsement bodies on the relevant Home Office list.

No doubt after the new visas have been in operation for a year or so we will have some sort of idea about how well things are working with the private endorsement bodies.

And the Home Office have issued some guidelines about endorsement. Proposed businesses suitable for endorsement should, they say, be “innovative, viable and scalable”.

Taking these apparently crucial words one at a time, we suppose that any decent business should be “viable”. A bit more tricky is “scalable” (ie a small operation is able to scale up to a larger operation). And potentially a lot more tricky is “innovative”. It is obvious that not every business can provide a totally new product or service.

But “innovative” is defined in a rather soft gobbledegook style: “The applicant has a genuine, original business plan that meets new or existing market needs and/or creates a competitive advantage.” We suppose that any good business plan should at least attempt to show “competitive advantage”, so perhaps this requirement is not going to be as difficult as it looks.

So much for the paper analysis. We shall have to see how things work out. Inevitably some caselaw about the new visas will emerge, and we will keep our readers informed about any interesting developments.


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