Practical Advice

From Afterthought to Foresight: Considering Immigration When Expanding Business Operations to the UK UK immigration

About the Author

Nadine Goldfoot

Partner, Fragomen LLP

So your organization has decided to take the plunge and dive into the UK marketplace for the first time. You may be unsure of all the legalities of setting up shop and may be planning to retain corporate counsel to deal with the aspects of UK incorporation.

You will need to take stock of immigration law if you are planning on having your employees travel to the UK, whether to deal with initial establishment activities, or perhaps to even relocate and manage the UK business for a period of time.

What, then, are the available immigration options to facilitate this transference of knowledge and help your business succeed?

Many companies overlook formal immigration requirements when setting up business in another country, partly because of a widespread perception that such activities will fall under the business visitor category, which is visa- and work permit-free in many countries.

Airport

IMMIGRATION OPTIONS FOR INVESTORS AND START-UP COMPANIES IN THE UK

The UK offers attractive options for investors and start up businesses but again the key is forward planning, particularly for those looking to set up business and employ non-EEA staff in, or move non-EEA staff to, the UK. One of the key grievances for business can be delays caused by immigration processing times. By planning for the future and making certain that personal and business plans are aligned to visa requirements, you ensure that there are no unexpected problems along the way and unnecessary delays can be avoided.

There are a number of immigration options available for you, your business and your potential employees. The

Tier 1 (Investor) and (Entrepreneur) Visas

Governments around the world are seeking individual investors and entrepreneurs to promote economic development, investment and job creation. The United Kingdom is no different. The UK government has stated its commitment to increasing the number of Tier 1 (Investor) and Tier 1 (Entrepreneur) applications.

The Investor Option

The Investor Visa allows you to work or set up business freely in the UK. It is a temporary status (granted initially for 3 years) but leads to permanent residence (investors can spend up to 180 days per year outside the UK prior to applying and remain eligible) and potentially UK citizenship. Investors can qualify for permanent residence at different times depending on their level of investment. This will be:

  • 5 years for those investing £1 million (around $1.65 million) in the UK
  • 3 years for those investing £5 million, or
  • 2 years for those investing £10 million

The key requirements for this visa are that:

  1. You can show you have at least £1 million in money of your own, under your control, which is disposable in the UK or £2 million in personal assets and £1 million which has been loaned to you by a UK regulated financial institution
  2. You will invest at least £750,000 in UK Government bonds, or share or loan capital of UK registered companies (but not in companies mainly engaged in property investment, management or development). This investment must be maintained at this minimum level to qualify for the extension of stay and ultimately for indefinite leave to remain
  3. You can invest £250,000 as above, in property or other assets, or hold it in a cash deposit account

The Entrepreneur Option

The Entrepreneur Visa is suitable for those investing funds into a new or existing business in the UK, working in the business, and creating employment opportunities for people settled in the UK. Like the Investor Visa it gives the holder temporary status (initially 3 years) but again leads to permanent residence (entrepreneurs can spend up to 180 days per year outside the UK prior to applying and remain eligible) and potentially UK citizenship. Entrepreneurs can qualify for permanent residence at different times depending on their level of investment. This will be:

  • 3 years if the business has created at least 10 new full-time jobs for settled workers
  • 3 years if the business has income of at least £5 million during a 3-year period
  • 3 years if a takeover of an existing business results in a net increase of £5 million in that business’s income from business activity during a 3-year period compared to the immediately preceding 3-year period, or
  • 5 years in all other cases, with the requirement to create 2 full-time jobs for settled workers

Taking on non-EEA employees

The Investor and Entrepreneur visa options are available to those who can fulfill the above requirements, but not all will be eligible. Your EEA employees can benefit from their Treaty Rights and move into and work freely in the UK. For other non-EEA employees, unless they hold immigration status in the UK in their own right, they will require your business to sponsor them under Tier 2 of the Points Based System (PBS).

In order to sponsor any non-EEA national under Tier 2, you must first hold a Tier 2 A-Rated Sponsor License and so the first step for your start-up company will be to obtain a license, which can be a lengthy process and requires considerable corporate documentation.

As a sponsor, you assume duties to the Home Office in respect of any staff you sponsor, and so the Home Office expect that you will manage your Tier 2 employees through their online Sponsor Management System (SMS) and that you have the ability to track and monitor your non-EEA population and competent HR systems in place.

Your license allows you to issue Certificates of Sponsorship (CoS) to your existing or prospective employees ahead of their Tier 2 visa applications.

Tier 2 options all require the role your employees are performing in the UK to be at ‘graduate level’, as defined by the Home Office. Underlying Tier 2 is the premise that you have either looked at the resident labor market and cannot find a suitable worker, are recruiting at a very senior level, or need to draw on the skill of your overseas workforce. In addition, you must meet minimum salary thresholds which will depend on the job type, entry level and visa sub-category, of which there are a number.

Some of the key questions you will need to address and plan for at the outset, to avoid later complications or delays, include:

  • Do I want my business to take on the responsibility of sponsorship?
  • Do we have the necessary documentation ready to obtain our Sponsor License?
  • Are the roles we need to fill in the UK going to meet the graduate level test?
  • Can we meet the minimum salary requirements?
  • How long do we need these employees to be able to continue working for us in the UK?

Tier 2 (General) sub-category

Under the Tier 2 (General) visa, you can sponsor a non-EEA national in a category that leads to settlement, subject to certain criteria. There is an annual limit of 20,700 for out of country applicants in this category, although it has not been oversubscribed to date. If your employee will be earning over £153,500 (c. $250,000) per annum then you are exempt from conducting a resident labor market test, as well as being exempt from the quota, and the process is expedited.

Tier 2 (Intra-Company Transfer) sub-categories

Assuming you are successful in obtaining a Sponsor License you can immediately seek to transfer necessary employees from your overseas business to the UK under this route. There are a number of sub-categories within this group, the most common being the Tier 2 (ICT) Short and Tier 2 (ICT) Long Term visas. For both of these visas, your employee must be working for you overseas for at least 12 months immediately prior to application (with very limited exception).

  • The Tier 2 (ICT) Short Term visa is valid for up to 12 months and your employee must be on a salary which is the higher of: (1) £24,500 (c. $41,000); or (2) the minimum for the job type and entry level
  • The Tier 2 (ICT) Long Term is valid for up to 5 years initially (and can be extended in the UK taking your employee’s total leave to 5 years). If your employee is on a salary of £153,500 (c. $255,000) or more then the visa can be extended to 9 years. The salary threshold for this subcategory is the higher of: (1) £41,000 (c. $69,000); or (2) the minimum for the job type and entry level
  • The Tier 2 (ICT) Skills Transfer is another type of intracompany transfer, appropriate where your employee is not filling a UK role but imparting their particular skill, or acquiring skills they need to perform their overseas role. Unlike the options above, your employee need not have been working for you overseas for 12 months or more but again they must be on a salary which is the higher of: (1) £24,500; or (2) the minimum for the job type and entry level. The maximum period allowed in the UK under this visa is 6 months and this is not extendable
  • An additional sub-category is available for up to five of your recent graduate recruits a year (employed by you for at least 3 months) who are being transferred to the UK as part of a structured and accelerated graduate training program (which clearly defines progression towards a managerial or specialist role). This is the Tier 2 (ICT) Graduate Trainee visa, and is valid for a maximum of 12 months. The salary threshold for this sub-category is the higher of: (1) £24,500; or (2) the minimum for the job type at the new entrant level

Tier 2 and planning for permanent or long-term UK employees

Tier 2 is not a category that necessarily leads to permanent status in the UK.

Furthermore, when a Tier 2 migrant leaves the UK, a cooling off period is applied against them which prevents them from returning to the UK until 12 months has passed from either their visa expiring, or their leaving the UK.

There are limited exceptions to this period but, as a result of the cooling off period and restricted access to settlement, it is important to ensure that the category selected for your employee at the outset is appropriate to your business needs and their individual circumstances. If permanent residence is an important factor then appropriate planning will be required to ensure that the appropriate process can be completed within your business timelines.

Can my business take on employees we find locally in the UK?

As noted above, if you want to take on a potential employee who is not an EEA national, or does not hold permanent residence in the UK, you will need to sponsor them under the PBS, unless they hold immigration status in their own right that allows them to work freely in the UK.

It is important to flag this as not all migrants can ‘switch’ visa status in the UK. Switching is the term used to describe the situation where an individual with one type of visa applies to change to another visa category whilst remaining in the UK. The Home Office allows switching in certain scenarios, such as where a Tier 2 (General) migrant is changing employer (which of course means they can leave you for another employer); or a Tier 2 (ICT) migrant granted leave under the rules in place before April 6, 2011 is now changing employer. In other cases, the employee would need to leave the UK to apply which will delay potential start dates, particularly if they are subject to the Tier 2 cooling off period.

FINALLY

The thrust of all of this is that your business cannot afford to ignore the immigration question. When starting a business in the UK, companies should look beyond just corporate and financial considerations and consider immigration from the outset, as this could be the key to business success. Shrewd immigration planning, then, can help businesses succeed in a new marketplace – but only if it is viewed in the window of foresight rather than obscured as just another afterthought.

Further Information

Nadine is a Partner in Fragomen’s London office, and has worked in UK immigration law for over 10 years. She has extensive experience advising on the full range of applications covered by UK Immigration Rules, including the Points Based System (PBS). Nadine represents some of the world’s largest companies in diverse industry sectors. She has experience providing strategic advice to companies on the establishment and maintenance of their immigration compliance and transactional programs and the immigration implications of corporate restructuring.

Nadine was one of the architects of the Fragomen Tier 5 International Internship Program, a pioneering scheme under Tier 5 of the PBS that sponsors non-EEA interns to facilitate their employment with UK employers. She is also skilled in representing high net worth individuals including Tier 1 (Investors) and Tier 1 (Entrepreneurs), particularly from China and India.

Nadine works closely with Fragomen’s government liaison team, which allows her to provide up-todate information on changes to laws and corporate compliance best practices. She sits on various policy and consultancy panels to develop and refine policy for PBS categories, and has represented businesses in lobbying exercises.

For more information contact:

Nadine Goldfoot, Partner
Fragomen LLP
Tel: +44 (0) 203 077 5051
Email: ngoldfoot@fragomen.com
Website: www.fragomen.com

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