Some of these problems arise as immigration law changes on a regular basis, and the changes apply to individuals who already hold a visa but who may not necessarily be keeping up to date with developments. Others arise due individuals misinterpreting the visa requirements and finally some issues arise due to the wording of the rules themselves. With this in mind it is vital that anyone seeking to extend an entrepreneur visa seeks specialist help to give themselves the best chance of success and to avoid some of these common issues:
The value of investment
In one recent case I was consulted by someone who had received a refusal from the Home Office. The justification for the refusal was that he had not invested the required £200,000 into his business. The client was confused as third parties had invested over £300,000 into his business and the Home Office accepted this had been made on his behalf.
When I reviewed the refusal I realised the refusal was not because the funds had been invested by third parties but because of the way it had been invested. The third parties had each purchased shares in the company for £1 and then paid an additional premium over face value.
The client had claimed points on the basis that over £300,000 had been invested into the company by way of share capital but the Home Office had only considered the face values of the shares and not the premium. This was because the Immigration Rules required the business accounts to show the number of shares and the value of the shares at the date of purchase, which in this case was X shares at £1 each, and this formed the basis of the investment.
Although the share premium was not considered to form part of the share capital investment we were able to advise on alternative ways to class the full sum as having been invested in the company, and we were able to suggest alternative wording for the accounts which would be acceptable to the Home Office.
Buying an existing business
In my previous article I mentioned that funds used to buy a business from an existing owner are not considered to have been invested in the company. This was never made clear in the Immigration Rules or guidance prior to 2014 and as such it continues to cause issues for people who invested prior to this date.
Now the guidance is clear that any funds used to purchase goodwill or an existing business are not invested funds and this applies regardless of when the investment was made. No transitional arrangements apply for people issued visas prior to 2014 and I have recently met with individuals who are unable to extend their visa due to this issue.
Anyone who obtains an entrepreneur visa needs to be careful how they invest the funds to avoid complications at the extension stage, and I would recommend taking advice on this as early as possible to identify any at risk investments prior to the extension being submitted to the Home Office. If the problem is identified at an early stage then an individual will have time to consider making further acceptable investments into the company, for example by way of director's loans.