How to make a successful Tier 1 (Entrepreneur) Application – Initial Applications

By Dr Lusine Navasardyan

Dr Lusine Navasardyan is Director and Head of Corporate and Business Immigration at RVS Solicitors. Dr Lusine studied at Yerevan State University and the Bucharest University of Economic Studies. She is also a published author and a member of the Bucharest Bar. As a Director of RVS Solicitors, she is instrumental to the operation of the law firm, and as Head of Corporate and Business Immigration, she helps our clients to forge new futures in the UK.

Throughout my years of practice, I am often asked- how difficult is it to get a Tier 1 (Entrepreneur) visa? I also regularly hear from the clients that they were told the chances of success are fifty-fifty. Often enough this information is relayed to the potential applicants by a legal professional.

Without a doubt, the above assessment is inaccurate. Not the least because each case is different and chances of success should be related to the client after a full assessment. There is, however a reason behind this myth. The numbers come from the fact that nearly 50% of all the Tier 1 entry clearance applications are being refused. However, failure rate does not translate to chances of success of an individual case. This rate, simply indicates that many submit applications that are either not prepared carefully enough or lack understanding of the requirements for this route. Perhaps more relevant is the fact that among the prospective applicants and to a degree, the legal professionals advising on the matter, there is lack of understanding of what the Tier 1 (Entrepreneur) route is aimed at. This creates scores of issues that are difficult to resolve, unless the legal representative is acutely aware of the problematic aspects of the route and how to address the same.

To start with, it is a point well-worth mentioning that Tier 1 (Entrepreneur) application is part of Points Based System. Universally, these types of systems are devised to eliminate subjectivity and make the process more straightforward, as the success of the application depends on the ability to meet the requirements and score the relevant points. As such, one would expect PBS to be relatively easy to navigate. However, the reality is much more complex.

The first major hurdle for Tier 1 (Entrepreneur) application is where this route parts ways from classical PBSs and institutes as a focal requirement the genuine entrepreneur test. To understand this test and assist the applicant with it, one must understand the aim of this particular route. Tier 1 (Entrepreneur) route is specifically aimed at attracting business-minded people to the UK, who will create and operate a successful business. Every other aspect of the requirements for this route is secondary.

Therefore, the very first question any application and applicant should be able to answer before applying, is whether they come across as a genuine entrepreneur. Have they managed, on the basis of the papers, to prove they are an asset for the UK economy and that they will be able to establish and successfully develop a business in this country. In essence, this is their first test in salesmanship. Can they, sell themselves to the UKVI as a genuine Entrepreneur?

Unsurprisingly, the number one reason for refusal of a Tier 1 (Entrepreneur) – initial application is failing the genuine entrepreneur test. The essence of this test is found in paragraph 245DB (f) of Immigration Rules:

(f) Where the applicant is being assessed under Table 4 of Appendix A, the Entry Clearance Officer must be satisfied that:

1. (i) the applicant genuinely intends and is able to establish, take over or become a director of one or more businesses in the UK within the next six months;
2. (ii) the applicant genuinely intends to invest the money referred to in Table 4 of Appendix A in the business or businesses referred to in (i);
3. (iii) that the money referred to in Table 4 of Appendix A is genuinely available to the applicant, and will remain available to him until such time as it is spent for the purposes of his business or businesses;
4. (iv) if the applicant is relying on one or more previous investments to score points, they have genuinely invested all or part of the investment funds required in Table 4 of Appendix A into one or more genuine businesses in the UK;.
5. (v) that the applicant does not intend to take employment in the United Kingdom other than under the terms of paragraph 245DC.

The above can be demonstrated by providing relevant evidence. The reasons for failing this test can be multiple. We will have a look at the most common below.

Genuine Entrepreneur test

Currently, one of the main requirements is to provide a business plan with a Tier 1 (Entrepreneurial) application. This is the starting point of assessing if the applicant is a genuine entrepreneur.

As shown above, the essence of the genuine entrepreneur test is that the applicant is genuinely able and intends to establish a business and invest in that business. Every business plan drafted for the purposes of Tier 1 (Entrepreneur) application must address elements that demonstrate the same.

So, where do most business plans fail?

First obvious culprit is the business itself. Many clients approach the legal representatives thinking that holding the funds is the most important part of such applications. This is false assumption. While having access to funds is essential, unless the applicant knows what business they want to establish or run, the application will fail. It is not uncommon that the applicant might not have all the details in mind. After all, more often than not, these are people who yet have to come to the UK for purposes of establishing a business and as such, might not have full understanding of the UK market. This is why, the approach should be holistic, working with legal professionals, accountants, business consultants and other professionals to guide the applicant correctly.

There is a further widespread conception that the chosen business should be one that the applicant has previously managed. While replicating a business that the applicant has previously managed is an obvious and easy choice, it is not always possible or desirable. Emphasis should always be on keeping the business as close to the skill-set of the applicant as possible. The approach should be as in any business venture. The questions that a well-presented application should aim to answer should be whether based on the applicant’s previous experience and skill-set, it is believable that they will succeed in the new venture.

Another frequent culprit that leads to failed applications is when the applicant wants to use a business plan that is not specifically created for the purposes of a Tier 1 (Entrepreneur) Application. Throughout my years dealing with such applications, I’ve seen numerous situations where the Applicant, a truly genuine business-person, either already has a business or has worked out a plan of business that has successfully attracted investors. The biggest mistake these type of applicants make is to rely on the business plan that has initially been devised for investors. It is essential to keep in mind that the elements that the Home Office caseworker requires to be able to identify whether the proposed investment and business will align with the scope of the relevant immigration rules and the elements that an investor is interested in when making a decision whether to commit funds to developing a particular product, service or business, are very different. This is the reason that it is always recommended that the business plan is developed specifically for the Tier 1 (Entrepreneur) application and if possible, specialist advise is sought in preparing the plan.

Other aspects that can lead to refusal are situations where the business plan is not very well prepared or researched, is fraught with mistakes or when same business plan is being used by several applicants. While this last point seems to be obvious, unfortunately many service providers seem to think that it is a good idea to re-use a business plan that previously has delivered a successful outcome. Understandably, presenting a business plan that is identical to one that another applicant has used, instantly puts the genuineness of the business under question. As explained above, it is always better to try and avoid an interview with the caseworker, where it opens the applicant to often very subjective assessment. Therefore, weakening the case by submitting a generic business plan that has been used by others in their applications is bordering on professional negligence, if done by a legal representative. Of course, there are situations, where several applicants are investing in the same business. The UK businesses, especially start-ups seem to have become more aware of the Tier 1 (Entrepreneur) route lately and more and more are using it to attract talent and investment they need. This is perfectly legal, in fact, this is one of the best ways of illustrating how this route can help the economy. However, from the perspective of preparing a successful application, while an investment in the same company will translate in certain data being re-used, the entire business-plan cannot be identical. Each applicant will need to show how their skills will be used towards developing the business and how the funds they will invest will help further the business. This will mean, different financial projections, job growth and even market presence. Therefore, presenting the same business plan, or one that seems to generic is equal to admitting the plan is not genuine.

Apart from the errors relating to the business plan itself, the other common failure is to omit providing evidence capable of substantiating the background of the applicant that is being relied upon in the business plan and the application. Here, the scenarios can be innumerable. The type of evidence will depend on the person’s background. It can be from academic certificates to awards, professional achievement certificates to letters of recommendation. What is important here, is not to overflow the caseworker with irrelevant information and evidence in an attempt to impress. The evidence should be pertinent, from reliable sources and address directly the points raised in the business-plan. Another important aspect is that the presentation of the case, which is done by preparing a detailed cover letter should be crafted in such a manner where the significance of evidence is well defined and explained. This will eliminate or significantly reduce the possibility that the caseworker might fail to grasp the relevance of the presented evidence. It also will make it easier for the caseworker making a decision to navigate the supporting evidence.

Another aspect to avoid, is the failure to provide evidence of the proposed business or rather, palpable proof that the applicant has the means, knowledge and connections to implement what is on paper. For those who are proposing to start a new business, the ability to convince the Home Office caseworker that they have the clout to make the proposed business work, will weight heavily. It is, therefore, always recommended that a paper-trail of market research or pre-contract discussions etc is preserved. This will help demonstrate the above points. This significance of this issue is diminished when the business has already been implemented and the applicant is either joining/taking over an existing business or is relying on a previous investment. However, for these applications there are other challenges, in particular, being able to demonstrate that the joiner will contribute to the development of the business.

A commonly neglected aspect is addressing the question of what will happen to the Applicant’s business overseas if such exists. In most cases, the applicants would already have businesses in their country of origin. In all such cases, the issue of how the business will be dealt with needs to be addressed. The Applicant should be able to demonstrate a business reason for wanting to close down an existing business, if that is the case. In cases where someone else will take over the day-to-day operations of that business, evidence of the same should be provided, together with business-based reasoning of why it has been deemed necessary, for the Applicant to leave the existing, and possibly thriving business, and relocate to the UK. In any event, what should be avoided is to give impression that the Applicant’s relocation to the UK is the primary reason for the application, the business should always come first. This does not mean that the Applicant cannot have personal reasons for wanting to relocate, but he or she should be able to demonstrate that the desire to develop a business in the UK is genuine and is likely to succeed.

I’ve mentioned above that should the Home Office caseworker deem it appropriate, the Applicant can be called in for an interview. I also have mentioned, it is best avoided. However, even with the best prepared applications, the Applicant must be fully ready for the possibility of an interview. In practice, this means having a very good understanding of the business they wish to pursue and of the financial projections for the business. The Applicant further needs to be able to show a strong understanding of the UK market, have good reasoning for choosing the UK market, have good knowledge of the relevant regulatory laws and rules for their chosen area and be able to demonstrate entrepreneurial abilities, such as understanding of managerial and marketing sides of the business.

Scoring the points

Reasons for refusal that are not related to the genuine entrepreneur test, most commonly revolve around having failed to provide the mandatory evidence.

Perhaps the most common of it is not having the exact wording required by the Immigration Rules for evidence of funding. Often enough, overseas banks are not willing to comply with the request of the wording. In many cases this can be resolved through communication with the bank, detailing to them the Home Office requirements and why it is important for them to include the required wording. It helps to understand that the reluctance mostly comes from the desire of the banks to limit their liability, therefore, it is almost always possible to negotiate a wording that will be satisfactory both, to the Home Office and the bank.

Another aspect that always needs to be kept in mind, is that there are certain overseas banks that are not accepted by the Home Office as reliable for evidencing the funds. These banks can be found in Appendix P of Immigration Rules. This list should always be checked.

Other issues involve not having held the required level of funds for the 90 day period, as required by the Rules. The reasons can differ, in some instances the Applicant did not account for the exchange rates. In other, the Applicant required it for his/her business or loaned it to a third party, thinking that it will be sufficient to show that the money was held prior to the 90 day period and then at the end of it. This is not acceptable. The money must be held for a continuous period of 90 days prior to the date of application, or rather the date when the letter or bank statements were issued. Which, in return cannot be more than 31 days prior to the date of application. The only exception is when the funds are provided by a third-party and relevant evidence is submitted. In relation to the documentary evidence from a Third-Party, perhaps the most common failure is the lack of the signature of the Applicant on the third-party letter, which is an element required by the Rules. This is but one example of the importance to closely adhere to the requirements of the rules in relation to the specified evidence. A note of caution in relation to Third Party funding is that the recent changes to the Rules have limited the circle of people who may provide such funding. Close family members are now eliminated from that pool and the Applicant cannot rely on funding from them.

Failing to provide relevant evidence of English language knowledge or maintenance funds accounts for another part of refusals. Here, the rules are quite clear and simply require clear adherence to them to avoid refusals.

Overall, nowadays it is more common to see applications fail for the reasons related to genuineness, rather than point scoring.

In conclusion, it is of utmost importance to have the right guidance in preparing Tier 1 (Entrepreneur) applications. One thing to keep in mind is, this is not simply a visa, this is also a start of a new business, therefore, foundations are more important and far reaching than in any other scenario. I have seen numerous cases where people have established successful businesses, to only be forced to wind it up and leave the UK, simply because they did not have the right immigration advice and ended up being refused right to remain after years spent in the UK.