Tier 1 Investor Visa Scheme Reform to Curb Illicit Financial Flows
On 6 December 2018, media outlets reported that the UK government had suspended the Tier 1 Investor Visa route with immediate effect. This caused an outcry amongst immigration solicitor and their representative groups, as it was, according to one Solicitor, “legislation by press release”. No notice of the suspension was issued by the Home Office. The only official comment came from the Immigration Minister, Caroline Noakes. She reportedly stated she was “bringing forward these new measures which will make sure only genuine investors, who intend to support UK businesses, can benefit from our immigration system”.
The Immigration Law Practitioners’ Association (ILPA) later notified its members that the Home Office had backtracked on its decision. This was confirmed by the Home Office on 11 December 2018.
At a time when business and investor confidence in the UK is on a knife-edge, thanks to Brexit and the chaotic process of pushing the final ‘divorce’ deal through Parliament, it seems extraordinary the Government would make such a rash decision, potentially jeopardising millions in foreign investment funds and sending a further message to conservatively-minded investors that Britain is in a state of confusion and therefore a risky investment prospect.
Concern Over Legitimacy of Investor Funds
The road which led to the extraordinary events of early December 2018 was paved with risk from the beginning. The Tier 1 Investor Visa was introduced by the Labour government in 2008. Rachel Davies Teka, head of Transparency International, an anti-corruption organisation, told the Guardian that “during its first seven years in operation, the Tier 1 Investor scheme was wide open to abuse by corrupt individuals as very few – if any – checks were carried out on the source of investments made. MPs have also criticised the system, leading to two reviews (and now a potential third) in four years.
In 2015, the Tier 1 Investor route was reformed. The investment required was increased from £1 million to £2 million, and applicants had to provide evidence as to where the funds originated from. This led to a significant drop in the number of people applying for the visa.
One of the biggest concerns regarding the Tier 1 Investor Visa is that it provides a route for Russian oligarchs to invest ‘dirty money’ in the UK. Around 3,000 Investor Visas have been issued since 2008, with over 700 of them being granted to Russians, some of who are allies of President Putin. In early 2018, Chelsea Football Club owner and oligarch, Roman Abramovich withdrew his application to extend his visa following the souring of relations between Russia and Britain, caused predominantly by the poisoning of Sergei and Yulia Skripal. It is widely considered this act was almost certainly approved “at a senior level of the Russian state” and resulted in Prime Minister, Theresa May accusing Russia of committing criminal acts on UK soil.
Suspension of Tier 1 Investor Visa Likely
Although the government backtracked on its decision to immediately suspend the Tier 1 Investor Visa from 6 December 2018, this does not mean suspension of the route is not imminent. The Home Office has stated it remains committed to reforming the visa and a further announcement will be made shortly. However, any suspension is now likely to occur through the correct channels, i.e. changes being applied through the Immigration Rules, with appropriate notice being provided.
If a suspension is put in place, it will likely remain until changes are made to the Immigration Rules to reflect certain reforms to the investor route. Such changes are often implemented in early spring.
Possible changes to the Tier 1 Investor Visa could include:
- an independent assessment of the source of investor funds, performed by regulated auditors
- regular checks made on who has control of funds over the course of the visa
- ending the ability to invest in UK Government Bonds
- restricting qualifying investments to include only those which are made in registered and actively trading UK companies
- allowing some pooled investments
The wisdom behind the quote “power corrupts, and absolute power corrupts absolutely” means the Tier 1 Investor Visa will always require ongoing review, especially given the sophistication of criminal operatives to engage in corruption and money-laundering activities. However, the British government needs to recognise that heavy-handed moves such as the possible unlawful suspension of the Tier 1 Investor Visa, which occurred on 6 December 2018 risks discouraging the majority of honest foreign investors, whose funds and confidence will be required if the UK is to move forward after Brexit. Foreign investment in Britain is holding strong, with Indian investment in the UK up 321%. However, overall foreign direct investment (FDI) in the UK has been declining, with 2017 seeing a 10% reduction in overseas investment into new or existing projects.
To thrive in a new trading environment with EU countries and build export relationships with other nations outside the bloc, UK companies need the government to welcome and encourage foreign investors. Arbitrary suspension of the Tier 1 Investor Visa simply creates more uncertainty and strengthens the view that Prime Minister Theresa May is committed to controlling immigration, at the expense of all else, including UK business interests.
A Y & J Solicitors are specialists in UK immigration law, we are based in central London. If you would like more information about the Tier 1 Investor Visa, please contact us at [email protected] or call +44 20 7404 7933.
Disclaimer: No material/information provided on this website should be construed as legal advice. Readers should seek an appropriate professional advice for their immigration matters.