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Complete Guide to the Genuine Entrepreneur Test

The idea of a genuine entrepreneur test started gathering momentum in 2012, when the UKBA was flooded with so many Tier 1 Entrepreneur applications. Even though refusal rates increased, more applicants were granted leaves when they challenged the Home Office' refusal decision.

The reasons for this was simply because they just needed to show that the applicant had access to £200,000, met the maintenance funds requirement as well as the English language requirement. In cases where it was almost clear that this person (applicant) was not in a position to run a successful business, the rules at that time didn't lay emphasis on that.

By January 31st 2013, the Home Office introduced the Genuine Entrepreneur test. The rule was introduced to ensure that only those who are indeed genuine entrepreneurs were granted visas under the Tier 1 Entrepreneur route.

According to the official statement by the UKBA, the Genuine Entrepreneur test was introduced to protect the Tier 1 Entrepreneur immigration category from abuse.

The test is both a subjective and objective assessment of your application to determine the genuineness of the application.

Elements of the test include:

  1. A business plan
  2. Applicant's CV
  3. Applicant's background in relation to the business
  4. Nature and source of funds
  5. Interview (Please note that not all applicants are interviewed)

Business plan

The business plan is a key aspect of the Tier 1 Entrepreneur visa application. Getting this wrong has negative ramifications on your application. It is important to understand that a business plan for a Tier 1 entrepreneur application is quite different from a conventional business plan. The general structure remains the same, but the approach is different.

The differentiating factors are the elements the Home Office is actually looking out for. Some of which include: -

  • Details of the business idea,
  • Evidence of a good market research, and
  • The applicant's involvement in the business

Details of the business idea

The Home Office is not an investor or a friend, who may steal your business idea if you make your business plan very detailed. Ironically, the more detailed your business plan is, the more likely you are to getting an approval; and the more likely you may not be called upon for an interview. Even when or if you are called for an interview, the answers to questions about your business should already be in your business plan.

The Home Office wants to know about your business idea. Is it a kebab shop to be located in East London shop or something that will really add value to the UK economy? Not that a kebab shop is a bad idea, but you may struggle to pull an application through with a kebab shop. Adding a little branding, special cuisines, exquisite packaging, may do well to make a normal kebab shop more attractive to the Home Office.

If you already have a business plan and are looking for an immigration lawyer to have a look at it to make sure it is compliant with what the Home Office wants, please contact us today.

We have also seen situations where people literally lift an old business plan or a template online to lodge an application. The Home Office are not daft to recognise that they have dealt with a particular business plan before with the exact same letters and figures.

Evidence of a good market research

Even though market research is a part of a business plan, it is important to look at it in isolation from the business plan because standard practice suggest that it can stand on its own (without the business plan). This can be done by way of feasibility studies. Also, the fact that your market is something you are expected to know as a genuine entrepreneur, it make sense to to mention it differently.

It is not out of place to expect that if you are planning to set up a business in another country you should not only research about the country, but also find out who your potential competitors will be. How do you plan to survive in market with its own peculiar competitive dynamism? What are your strengths and weakness in relation to the competition? What the opportunities and threats in the environment?

The Home Office will be expecting you to know your market - as a genuine entrepreneur.

Applicant's involvement in the business

It is fine to have a good business plan, but the question of what you are bringing into the business cannot be overemphasised. Your business plan must be able to answer why you need a visa to do that business in the UK. It is going to be difficult convincing the Home Office that you even though you have nothing to add to the business in terms of skill, management, experience, etc., that you should still be granted a visa to do that business in the UK.

This argument follows, when you consider the fact that the Home Office categorically mentions that they expect the applicants to be directors in the business. How can you be a director of a business you cannot add value to - you should be at least able to direct the business.

This then brings us to the next point of what the Home Office looks out for in the Genuine Entrepreneur Test, the applicant(s) CV.

Applicant's CV

Often the most overlooked aspect of the application (by the applicant of course), your CV goes a long way in amplifying the content of your business plan. It is your CV that demonstrates your skills set in relation to the value you will add to the business as a Director.

The decision maker will also look to determine whether or not there are things about the applicant's experience that may suggest that they can manage the business. In a way, there has to be some form of reasonable correlation between your CV and your business plan.

The Home Office's assessment of your CV: -

  1. Do you have any background in the field you are looking to set up a business in?
  2. Are there things about your experience that suggests that you can manage the business?

Take this scenario, applicant A has worked for 25 years as Chef in a restaurant he co-owns. He is now applying for a Tier 1 Entrepreneur visa to set up a restaurant in the UK.

Applicant B has never worked anywhere and has just finished his university degree where he studying music. He now wants to apply for a Tier 1 Entrepreneur visa to set up a restaurant in the UK.

It is clear that applicant A is more likely to succeed that applicant B with that business idea. However if applicant B plans to set up a musical record label in the UK, he stands a better chance of succeeding.

The Home Office is therefore expecting to see a clear link between the applicant's background and the business they are planning to set up.

Importantly applicants need not have direct educational or professional experience in the proposed business idea on their application. Even though that will be advantageous, it most likely will not break the application. A general managerial experience or even a leadership role may suffice as a reasonable proof applicants’ capability to set up and manage the business.

Nature and source of funds

Generally, if the funds is in your account (the applicant), you must leave the entire sum there for 90 days priors to submitting the application.

The UKBA has a responsibility to ensure that it is not encouraging fraudsters, funding terrorism and corrupt government officials to steal money from their home countries and then move it to the UK to start a business. The Home Office have therefore made it mandatory that applicant's declare the source of funds. The source of funds must not be illegal both in the country of origin as well as in the UK. If the Home Office have any reason that this source of fund is illegal, the Home Office will reject the application.

What documents do I require to show proof of genuine entrepreneur?

If you are wanting to apply to enter the UK under the Tier 1 entrepreneur visa then you will need to satisfy Home Office officials that you are genuinely an entrepreneur. Due to the nature of the visa scheme, it is one of the most refused applications in existence. But if you are a genuine entrepreneur you have little to fear; as long as you can provide documentary evidence to support your claim, you should stand a very strong chance of success.

The list of documents required are:

  • Client contracts
  • Advertising material
  • Business and personal bank statements for at least the past 3 months.
  • Employment documents
  • Accounts for the last three years of the business, or from when it started trading (if more recently than three years)
  • Corporation tax return
  • FPS documents
  • Insurance documents
  • Health & safety certification
  • Tenancy agreement for the business premises
  • Invoices for clients
  • Director loan agreement
  • Copy of application form

As long as this documentary evidence is provided, you should have satisfied at least the documentary requirement of the genuine entrepreneur test. This isn't the only part of the genuine entrepreneur test but is one of the more important aspects. This documentary evidence is vital so that you can prove that you have done all of your due diligence in preparing for success in your business.

Other things to bear in mind

The genuine entrepreneur test is designed to ensure that the applicant is genuine and that they have a reasonable chance of success. This is likely to include interviews. The interview will be designed to ensure that the applicant has a very strong understanding of the market that they are entering and that they can run a successful business within the industry.

The Tier 1 Entrepreneur Interview

Generally, the Home Office does not interview every single Tier 1 entrepreneur application. However the Home Office reserves the right to contact an applicant to ask further questions regarding their application. The invitation for an interview by itself is neither a good thing nor a bad thing. The applicants will be asked questions about the business plan, source of funds, market research and other aspects of the application

The interview and application are not designed to catch you out, they are designed to ensure that the most appropriate applicants make it to the UK to run their businesses. The UK has a long list of people trying to enter and it is down to these Home Office officials to ensure that only the most likely to succeed get in. So please don't be scared, it is just a formality, but you will need to have a very strong market knowledge and the documentary evidence to prove it. With our services, you can get prepared by specialists who will make sure that you have everything you need to succeed in your application.

At Reiss Edwards, out team of Tier 1 Entrepreneur lawyers have a strong background in business as well as individual immigration. We can advise you on all aspect of your application from entry clearance up until your Indefinite leave to remain application as a Tier 1 migrant. Contact us today for a free consultation on 02037442797 or drop us an email on info@reissedwards.com

 

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