Tier 1 (Entrepreneur) category closing for extension and ILR applications

The Tier 1 (Entrepreneur) category is closed to new applicants and the deadlines for individuals to apply for an extension of leave, or Indefinite Leave to Remain (ILR), in this category are fast approaching. This article sets out who is affected and what individuals should be considering to ensure their UK immigration status remains protected.

Tier 1 (Entrepreneurs) – Important deadlines, actions, and considerations

The Tier 1 (Entrepreneur) category, created for individuals to establish, or demonstrate credible potential to establish, a business in the UK, closed for new applications on 29 March 2019 and we will soon see the doors for extension and settlement applications close for good.

The category underwent many changes over the years as the Home Office sought to ensure that those granted permission under this category were genuine businesspersons. Those seeking entry and further grants of leave were required to demonstrate business activity, growth and/or success, with points awarded for level of investment funds; business activity; job creation, as well as being a “genuine entrepreneur”.

The number and complexity of the changes to both the substantive and evidential requirements of the entrepreneur visa category led to it becoming notorious to applicants and immigration lawyers alike, with some of the highest refusal rates. Due to ongoing concerns over the genuineness of candidates, the Home Office took steps to close the category, making it no longer available to new applicants and introducing deadlines for those already with permission.

For those who are not able to remain in the Tier 1 (Entrepreneur) category, the Home Office expects them to apply for permission under one of the replacement immigration categories: the Start Up and Innovator routes.

Application deadlines: What you need to know

For those who still hold leave in the Tier 1 (Entrepreneur) category, there are important deadlines to be aware of:

• The deadline to apply for an extension of leave to remain is 5 April 2023
• The deadline to apply for settlement (ILR) is 5 April 2025

There are separate deadlines for those who switched from the Tier 1 (Graduate Entrepreneur) or Start-up categories into the Tier 1 (Entrepreneur) category:

• 5 July 2025 for extension applications
• 5 July 2027 for settlement (ILR) applications

There can be serious consequences if an application is not made by the deadline. For example, a person who has not applied for ILR, or extended their leave in order to reach the three or five year qualifying period for ILR, will have to make an application on a different basis and may need to ‘restart the clock’ towards ILR.

Even if your permission is not due to expire for some time, it is also important to be aware of the relevant criteria you need to meet in advance to ensure that an application is successful. The Tier 1 (Entrepreneur) requirements are known to be some of the most stringent and convoluted, which is the reason why many applications result in refusal. The pending deadlines will mean that you may only have the one opportunity to make your next application, so it is essential that you are fully aware of the requirements and supporting documents that will be required.

Job creation as a requirement for extension and ILR

One of the most problematic requirements to be met, at both extension and ILR stages, is that relating to job creation. This is also the requirement that seems to have been most affected during the Covid-19 pandemic.

An application will only be approved where you can demonstrate:

• The creation of at least two new full-time jobs (or their equivalent) for settled workers; or
• A net increase in employment through creation of at least two new full-time jobs for settled workers as a result of a takeover or investment in new business

In addition, each job must have existed for at least 12 months, and there are also complicated rules for how part time jobs “add up” to full time jobs in meeting this requirement. Therefore, any concerns regarding the number of hours, or the period during which the role has been filled, should be addressed at the earliest opportunity, so that the relevant planning and/or measures can be put in place.

A difficult market for job creation?

Significant developments over the past few years such as Brexit, Covid-19 and the numerous lockdowns, war in Europe, industrial action and strikes, and the economic downturn, may have negatively impacted businesses, with events, both at home and abroad, potentially resulting in them not being able to meet the job creation requirement, as well as the other Tier 1 (Entrepreneur) requirements for which business growth is a prerequisite for permission to be granted.

The extent to which these factors can be taken into account when an application is being considered is therefore an important consideration for those coming to renew their status.

What is the effect of the Covid-19 concessions?

There is published policy for those with leave (permission to stay) as a Tier 1 (Entrepreneur) where their business has been disrupted due to the Covid-19 pandemic, with Home Office guidance stating the following:

You no longer need to employ at least 2 people for 12 consecutive months. The 12 month period you’re required to employ someone for can be made up of multiple jobs across different months but this must be equivalent to 2 full time jobs.

Time when your employees were furloughed will count towards the 12 month period if they have been paid at least 80% of their normal salary.

If you’ve not been able to employ staff for 12 months by the time your visa expires, you’ll be allowed to extend your stay for a further 2 years, if you can show:

• you‘ve created at least 2 jobs by the date you apply
• you’ve been unable to employ staff for 12 months due to coronavirus

The continued expectation for ILR is that the applicant can show creation of two new jobs which have each lasted 12 months prior to the date of their ILR application. This may simply not be possible for recovering businesses and highlights the importance of all applicants being aware of the ILR requirements as early as possible. Even where the next application is meant to be for ILR, applicants whose businesses have suffered negatively by Covid-19, may actually be better placed in seeking a temporary extension of their permission by 6 April 2023. This is permitted where a business has been affected by Covid-19 and would provide more time for the business to continuing operating, to help applicants get to a position where they qualify for ILR, even where Covid concessions have previously been applied.

What should those in the Tier 1 (Entrepreneur) category be doing now?

Many of those in the Tier 1 (Entrepreneur) category will have already been granted ILR, or an extension of leave allowing them to reach ILR, in the category. However, for those who have not and wish to obtain settlement in the category, it will be important to be clear on their path to indefinite leave to remain and what this will involve. Individuals in this position will want to ask the following questions:

1. When does my Tier 1 (Entrepreneur) leave expire?

2. Which deadline applies to me and when should I make my application?

3. Do I need to apply for an extension of leave to allow more time to qualify for ILR?

4. Will I meet the requirements relating to business activity, job creation and profitability?

5. Do my absences fall within the limits to be granted ILR (now or in the future)?

6. How will long absences from the UK be treated and can I take account of Covid-19 concessions?

7. Is my business administration and are my tax affairs up to date?

8. Will I be able to provide the necessary documents to meet the rules on specified evidence?

9. What can I do if I don’t meet the requirements before the expiry of my current leave?

10. How many dependants are applying with me and what are the relevant fees?

11. What happens if my application remains undecided after the deadline has passed?

12. What happens if my application is decided and refused after the deadline has passed?

It is important for individuals to consider these questions well in advance of an application in the Tier 1 (Entrepreneur) category and to allow sufficient time to prepare and compile the necessary documentation. This will help to ensure the requirements can be met before the relevant deadline.

Those applying for ILR should consider the eligibility criteria now, in case they need to apply for Leave to Remain first, should more time be needed to meet the ILR criteria.

If there is any risk that the requirements cannot be met, we recommend that advice is sought as soon as possible so that options can be explored and to ensure a correct application is made to protect immigration status.

Alternative immigration categories

The Entrepreneur visa category fell under “Tier 1” of the Points-based system which also housed the Tier 1 (General), Tier 1 (Investor), Tier 1 (Exceptional Talent) and Tier 1 (Graduate Entrepreneur) categories, all of which have now been closed indefinitely.

Various new routes have been created in the wake of Brexit, which replace these old routes. The successor immigration category for those who have, or wish to, set up business in the UK are the Start Up and Innovator routes. However, these have attracted criticism for being too restrictive and subjective. The closure of the Tier 1 categories has therefore created a lacuna for overseas business people, notwithstanding the new routes.

There are alternatives to the Innovator and Start-up routes; perhaps the most coveted of these is the Global Talent route, popular due to the flexibility it affords applicants and the special status of the visa. It has been created for those who are, or who can demonstrate potential to be, a leader in their industry. As such, the threshold for entry into the category is set high and so only a few individuals (who might otherwise have applied in the entrepreneur categories) will likely be able to take advantage. It is also a category undergoing evolution, as indicated in our article regarding the recent closure of Tech Nation as a subcategory within this route.

There may also be other immigration categories for which a person may qualify which allow them to work in the UK, however this will depend on their particular circumstances.

Conclusion

What is clear is that these scheduled changes require action, and it is therefore vital that all impacted individuals are aware of the deadlines which are relevant to their circumstances. Furthermore, the stringent category requirements mean that it is essential that all applicants are fully prepared and allow an appropriate amount of time for the application process.

In particular, the job creation requirement may cause some added complexities, especially as many will perceive the Home Office guidance to be confusing. Although concessions have been implemented regarding Covid-19, rather alarmingly, other significant factors which may have as equally negatively impacted business performance, have not been considered. Therefore, some may find meeting the criteria a significant challenge.

The most crucial factor is time, and the priority is for individuals to be aware of all the options available to them. We strongly recommend that advice is sought at the earliest opportunity, especially where is a risk that requirements may not be able to be met. Our Immigration team offers advice and assistance on the full range of immigration categories. For further information on how we can support you, please contact one of our experts below.