Baroness Hamwee, a Liberal Democrat politician and Lead Home Affairs Spokesperson of the House of Lords, has proposed an amendment to the Immigration Rules to be discussed in committee, one of the most surprising elements of which is a move to abolish the Tier 1 Investor category, by no later than 1st January 2017.
It is not clear what has prompted this proposal and the timing. However, there has been a widespread speculation that the scheme has been abused by some ill-minded applicants as a mean to launder corrupted money into the UK. The International Transparency UK published a report in October 2015, and the findings from the organisation”s own research has indicated that there were significant weaknesses under the Tier 1 (Investor) scheme in terms of its level of compliance and standards of reporting across private sectors, which may have resulted in the proposed abolition of the visa. Following the report published in October 2015 by International Transparency UK, the Home Office has introduced a new rule to the Tier 1 (Investor) scheme. It now requires applicants under this category to demonstrate that they have opened an account with a UK regulated bank for the purpose of investing not less than £2 million pounds. It is worth noting that during the process of opening a UK bank account for the investment purpose, the regulated financial institutions are required to conduct more extensive due diligence checks under The Money Laundry Regulations 2007.
Potential impacts from abolishing the Tier 1 (Investor) visa
In order to settle in the UK, the Tier 1 (Investor) migrants are required to demonstrate that they “have lived in the UK lawfully” for a continuous period of 2, 3 or 5 years depending on their investments. These high valued migrants contribute to the UK economy by consuming products and services offered by the UK businesses. Therefore, the closure of the Tier 1 (Investor) scheme could have an effect on these individuals contributing to the economy and deter them away from the UK towards other countries that have a more favourable regime in place.
What are the alternatives for Tier 1 investors?
If the Tier 1 investor Visa is abolished, many foreign investors may begin to look at the Tier 1 Entrepreneur Visa, which is aimed at encouraging international business people to set up in the UK, however this system requires much stricter skills and language testing which may be off-putting for potential investors, for example many Tier 1 (Investor) who are successful business people, in their home country. This type of clients might not necessary have the time to physically set up and operate the business in the UK even though the investment funds are not of an issue for the applicants. Often, these applicants applied under the Tier 1 (Investor) scheme so that their dependent children can enjoy a better education system in the UK. Furthermore, we also see a significant number of young Tier 1 (Investors) who are studying or finishing their degree in the UK. These types of applicants are gifted the investment funds by their family members. Often, the young investors want to continue to remain in the UK for better prospects for their future career.
If the Tier 1 (Investor) scheme were to close, these young investors may not necessarily gain the right to live and work in the UK through the Tier 1 (Entrepreneur) scheme as they often lack of the hand-on experience in setting up and managing a business. It is important that if the Tier 1 investor visa is abolished that there is another system in place to help attract these young valued migrants to the country.
The draft as it is currently worded does not intend to have any effect on those already in possession of valid Tier 1 Investor visas.
If you are looking at applying for a Tier 1 Investor Visa, we advise that you start the process as quickly as possible. Please contact us at email@example.com if you have any questions regarding Tier 1 Visas.