LexisNexis

Recent changes in UK immigration policy: Representatives of Overseas Businesses category

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Laura Devine
Laura Devine Immigration, London
laura.devine@lauradevine.com

Francesca Sciberras
Laura Devine Immigration, London
fs@lauradevine.com

Joshua Hopkins
Laura Devine Immigration, London
joshua.hopkins@lauradevine.com

 

Introduction

The Home Office published a statement of changes on 14 May 2020, confirming proposed amendments to the Immigration Rules for a number of United Kingdom immigration categories.

This statement included changes to the Representatives of Overseas Businesses category, also known as the ‘Sole Representative’ category, which came into effect on 4 June 2020. The Home Office updated its guidance for the Sole Representative category on the same day, which aimed to clarify the practical effect of a number of these amendments.

Sole Representative category – general rules

The changes introduced on 4 June 2020 did not amend the purpose or the core mandatory requirements of this category, which are set out below.

The Sole Representative category enables overseas businesses to expand in the UK. A representative of the overseas business can apply under this category for permission to enter the UK with a view to setting up a branch or subsidiary. Successful applicants will only be able to work for the overseas business: other employment is prohibited.

There are a number of mandatory eligibility requirements to be met for an application to be approved. In relation to the overseas business, it must be adequately demonstrated that:

  • the business intends to have its headquarters and principal place of business outside of the UK; and
  • that it has no active branch, subsidiary or representative in the UK.

The applicant must:

  • be a senior employee who was recruited and engaged outside the UK;
  • not be a majority shareholder of the overseas business;
  • meet an English language requirement; and
  • be able to sufficiently maintain and accommodate themselves in the UK.

Changes to the rules and guidance

One of the most noteworthy changes is the increased restriction on the applicant’s ownership of the business. In addition to not being permitted to be a majority shareholder, it is now prohibited for an applicant to have a majority stake in the business, or otherwise own or control the business via partnership agreement, sole proprietorship or any other arrangement. This restriction also applies to individuals applying as the partner of someone with permission under this category. The guidance is more specific in its explanation of this enhanced restriction – applicants are prohibited from owning or controlling more than 50 per cent of a business, whether via shareholding, partnership, voting rights, sole proprietorship, self-employment or any other arrangement. This amendment represents a significant tightening of the rules compared to its previous form.

The mandatory eligibility requirements relating to the applicant and the nature of their employment relationship with the business have also become tougher. Whilst the applicant may be a director or the founder of the company, self-employment is not allowed. This is reflected by the heightened evidentiary requirement for there to be an employment contract which complies with UK employment law and contains certain prescribed elements (for example, a minimum number of working hours, holiday pay and salary). The applicant must also now be an existing employee – this suggests that it will not be possible to simply recruit a new employee at the senior level immediately prior to an application being made (it is unlikely this would have been previously possible). Furthermore, the applicant must now possess the ‘skills, experience and knowledge of the business necessary to undertake the role’. It is the ‘skills’ element of this express requirement which is completely new. It is unclear what the relevant threshold for this will be and how the Home Office will assess this.

Finally, a new genuineness requirement has also been introduced. All applicants are required to show that they are not setting up a commercial presence in the UK as a guise to obtaining UK immigration permission. The guidance goes into further detail on the applicability of this requirement. It appears that it will mainly be relevant where the Home Office has any reason to doubt whether the applicant meets the other mandatory requirements. Whilst the guidance provides some examples (for example, where the overseas business has only recently been set up or where the business has a small number of staff), it is clearly stated that these examples are non-exhaustive, which creates the risk of providing the Home Office with too much discretion. The guidance does also provide a safeguard against this: all applicants must be given ‘a reasonable opportunity’ to respond to any Home Office questions in relation to this new requirement.

Analysis

It is evident that the introduced amendments are to the disadvantage of overseas businesses and prospective applicants. It will be tougher to meet the rules and there is a lack of clarity as to how to best prepare an application for certain new requirements.

A combination of the devastating financial impacts of the pandemic and the ongoing Brexit uncertainty has unsurprisingly led to projections of significantly reduced economic growth for the UK for at least the next few years. It therefore seems to be an extremely odd decision for the Home Office to complicate the criteria for a category which has the purpose of attracting successful overseas businesses to the UK.

Given the current circumstances, it would be beneficial to see the Home Office take a flexible approach to applying these new rules. However, whether it will do so in reality remains to be seen.

 

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