Tier 1 Entrepreneur Success Rate 2018 | Rejection Reasons

This relates to Tier 1 Entrepreneur Statistics and provides the details of entry clearance, leave to remain, extension and ILR (Settlement) applications from 2008 to June 2018. Accordingly, the post provides the details of the UK Entrepreneur Visa Success Rate, Refusal Rates and Refusal Reasons in the light of immigration statistics and policy development during the course of the last ten years and covers the following topics:

  • Tier 1 Entry Clearance, Extension and Settlement Grants 2008-17
  • Why Extensions are higher than Entry Clearances?
  • Entry Clearance Applications, Grants and Success Rate
    • Main Applicants
    • Dependants
  • Tier 1 Entrepreneur Entry Clearance Success Rate Per Year 2008-18
  • Tier 1 Entrepreneur Extension Refused and Success Rate
  • Extensions Success Rate Per Year
  • Tier 1 Entrepreneur Refusal Reasons: Entry, Extension and ILR – Grounds of Refusal due to an inability of an applicant to meet the requirements such as:
    • Unverifiable Source of Funding
    • Doing Business in the UK is not the Main Purpose
    • Generic Business Plan
    • Insufficient Evidence of Employment Creation, Business Registration
    • Shell Companies

Apart from the Grounds of Refusal stated in the Tier 1 Entry Clearance, Extension and ILR (Settlement) Refusal Letter, the post will also to try to explain: how actual and perceived abuse of the System, subjectivity and flaws of Genuine Entrepreneur Test and Unclear Policy Objectives have indirectly resulted in refusal of otherwise maintainable applications. Nevertheless, the statistics indicates that the impact of the preceding three factors is receding as success rate for both the entry clearance applications from outside the UK and extension applications from inside the UK is showing buoyancy and an upward trend. Moreover, due to changes in the tightening of the extension criteria has mitigated a number of perceived and actual issues associated with the abuse of the system.

For successful representation of your initial, leave to remain, extension and indefinite leave to remain application, administrative review and judicial review contact specialist Business Immigration Solicitors London.

UK Entrepreneur Visa Success Rate | Extensions | Settlement

Tier 1 Entrepreneur Success Rate 2018 | Rejection Reasons

The Tier 1 (Entrepreneur) route was introduced in 2008 to replace a number of other business immigration routes, mainly the Business Person and Innovator routes. According to the Official Statistics, during 2008-17 a total of 21,727  Tier 1 Entrepreneur Main Applicants were granted Entry Clearance (6,413), Extensions (14,495 including Leave to Remain) and Settlements (819). During the ten year period, most main applicants (1,166) were granted Tier 1 Entry Clearance Visas in 2013; whereas, the highest number of extension grants (4,401) were made in 2014. So far, the highest number of settlements (414 indefinite leave to remain) were granted in 2017.

Why Extensions are higher than Entry Clearances?

The number of extensions (14,495)  grants to the main applicants are higher than entry clearance (6,413) grants as switching from other PBS routes is allowed from inside the UK. Therefore, a number of applicants switched from Tier 1 (General), Tier 1 Post Study Work, Tier 2 and Tier 4 to Tier 1 Entrepreneur, thereby making the number of extensions higher than entry clearance grants.

Table 1 – Tier 1 Entrepreneur Visa Statistics: Grants to the Main Applicants from 2008-17
Year Entry Clearances Extensions Settlements Total
2008 27 11 1 39
2009 118 89 2 209
2010 189 180 7 376
2011 421 360 7 788
2012 701 803 14 1,518
2013 1,166 3,327 34 4,527
2014 1,087 4,401 55 5,543
2015 918 1,375 153 2,446
2016 812 1,501 132 2,445
2017 974 2,448 414 3,836
Total 6,413 14,495 819 21,727

Entry Clearance Applications, Grants and Success Rate

As illustrated in Table 2, during the last ten years i.e. from 2008 to June 2018, a total of 27,968 applications have been made by the main applicants and their dependant family member under the route. 27,789 entry clearance applications have been resolved and 18,390 visas issued and the UK Business Visa Success Rate is 66.18%. So far, 9,195 applications have been refused and the Tier 1 Entrepreneur Refusal Rate has been 33.08%; whereas, 200 applications withdrawn by the applicants and 4 applications lapsed during the period.

Main Applicants

From 2008 to June 2018, a total of 12,663 applications have been made by the main applicants under the route. 12,523 entry clearance applications resolved and 6,920 visas granted with a success rate of 55.26%. So far, 5,510 entry clearance applications of the main applicants have been refused with a refusal rate of 44%; whereas, 91 applications withdrawn by the main applicants and 2 applications lapsed during the period.

Table 2 – Tier 1 Entrepreneur Success Rate and Entry Clearance Applications by Main Applicants and Dependants from 2008 to June 30, 2018
Type Applications Resolved Granted Success Rate
Main Applicants 12,663 12,523 6,920 55.26%
Dependants 15,305 15,266 11,470 75.13%
Total 27,968 27,789 18,390 66.18%

Dependants

From 2008 to June 2018, a total of 15,305 applications have been made by the dependants  under the route. 15,266 entry clearance applications resolved and 11,470 visas granted to the Tier 1 (Entrepreneur ) dependants with a success rate of 75.13%. So far, 3,685 entry clearance applications have been refused with a refusal rate of 24.14%; whereas, 109 applications withdrawn and 2 applications lapsed during the period.

Table 3 – Tier 1 Entrepreneur Entry Clearance Applications Refused and Refusal Rate from 2008 to June 30, 2018
Type Refused Refusal Rate Withdrawn Lapsed
Main Applicants 5,510 44.00% 91 2
Dependants 3,685 24.14% 109 2
Total 9,195 33.08% 200 4

Disparity in the Success and Refusal Rate of Tier 1 (Entrepreneur) Main Applicants and Dependants is mainly due to number of family members and sequencing of the applications as under the policy guidance an applicant can apply with or without dependants.

Tier 1 Entrepreneur Entry Clearance Success Rate Per Year

The Table 4 provides the annual details of the Tier 1 Entrepreneur Success Rate of the Main Applicants from 2008 to June 2018. The immigration statistics indicates a variation of 30% in the annual success rates during the ten year period as success rate during 2012 was 78.06% and it came down quite drastically in 2013 to touch a level of 49.18% due to policy changes announced in Jan 2013. The success rate increased in 2014 to 55.40% but afterwards in 2015 again came down to reach its lowest ebb of 48.01%. Since 2016 the success rate is on the rise and in 2018 so far it is 56%, which looks promising for genuine entrepreneurs to get the immigration through this route for setting up business in the UK.

Table 4 –  Entry Clearance Applications by the Main Applicants from 2008 to June 30, 2018 and UK Entrepreneur Visa Success Rate
Year Applications by the Main Applicants Resolved by ECO Visas Granted Success Rate
2008 64 56 27 48.21%
2009 179 173 118 68.21%
2010 259 255 189 74.12%
2011 580 557 421 75.58%
2012 978 898 701 78.06%
2013 2430 2371 1166 49.18%
2014 1906 1962 1087 55.40%
2015 1906 1912 918 48.01%
2016 1608 1615 812 50.28%
2017 1860 1799 974 54.14%
2018 Q1 410 452 241 53.32%
2018 Q2 483 473 266 56.24%
Total 12663 12523 6920 55.26%

Tier 1 Entrepreneur Extension Refused and Success Rate

As elucidated in Table 5, during the last ten years i.e. from 2008 to June 2018, a total of 47,781 decisions have been made on extension (including leave to remain to remain: switching) applications made by the main applicants and their dependant family member under the route from inside the UK. During the period, 25,539  extensions granted and the Tier 1 Entrepreneur Extension Success Rate is 53.45%. So far, 22,242 Tier 1 Extension Applications have been refused and the Tier 1 Entrepreneur Extension Refusal Rate is 46.55%.

Table 5 – Tier 1 Entrepreneur Extension Refusal Rate and Details of In Country Decisions by the Home Office from 2008 to June 30, 2018
Type Decisions Grants Refusals Refusal Rate
Main Applicants 31,366 15,918 15,448 49.25%
Dependants 16,415 9,621 6,794 41.39%
Total 47,781 25,539 22,242 46.55%

Tier 1 Entrepreneur Extension Success Rate Per Year

The Table 6 provides the annual details of the Tier 1 Entrepreneur Extension Success Rate of the Main Applicants from 2008 to June 2018. There has been a variation of 46% in the annual success rates during the last ten year period as the success rate during 2011 was 82.57% and it was only 35.92% during 2013 due to policy changes announced in Jan 2013. The success rate increased in 2014 to 50.56% and  afterwards further improved to 67.29% in 2017.  In the first two quarters of 2018 the success rate is more than 61%,  which is a positive sign for future extensions.

Table 6 –  In Country Extension Decisions by the Home Office and Tier 1 Entrepreneur Extension Success Rate from 2008 to June 30, 2018
Year Decisions Grants Refusals Success Rate
2008 24 11 13 45.83%
2009 118 89 29 75.42%
2010 222 180 42 81.08%
2011 436 360 76 82.57%
2012 1,247 803 444 64.39%
2013 9,263 3,327 5,936 35.92%
2014 8,705 4,401 4,304 50.56%
2015 2,648 1,375 1,273 51.93%
2016 2,734 1,501 1,233 54.90%
2017 3,638 2,448 1,190 67.29%
2018 Q1 1,067 639 428 59.89%
2018 Q2 1,264 784 480 62.03%
Total 31,366 15,918 15,448 50.75%

Tier 1 Entrepreneur Refusal Reasons : Entry, Extension and ILR

An holistic viewpoint suggests that the refusal reasons fall in under four broad categories:

  1. Grounds of Refusal due to an inability of an applicant to meet the requirements such as:
    • Unverifiable Source of Funding
    • Doing Business in the UK is not the Main Purpose
    • Generic Business Plan
    • Insufficient Evidence of Employment Creation, Business Registration
    • Shell Companies
  2. Actual and Perceived Abuse of the System
    • Impact of Tier 1 Post-Study Work Route
    • Tightening of Entrepreneurial Route
    • Restrictions on Switching
  3. Genuine Entrepreneur Test as it has resulted in refusal of even genuine applicants and has been criticized due to the following major reasons:
    • A Subjective Mechanism
    • Genuineness of Business Vs. Likelihood of Success
    • Dissuades Potential Entrepreneurs
    • Insufficient Training of the Immigration Officers
  4. Unclear Policy Objectives in defining the purpose of the route, which may have resulted in rejection of extension application relating to less risky and more traditional businesses:
    • Who is an entrepreneur?
    • Policy Bias Towards High Skill Businesses
    • Differentiation between start-ups and existing businesses

Unverifiable Source of Funding

This is a common problem with entry clearance and extension applications. In a number of instances, especially those relating to third party funding the applicant is not able to provide satisfactory source of funding and upon checks by the immigration officer it was found that the money is not available for disposable in the UK.

Doing Business in the UK is not the Main Purpose

If an applicant is  not able to satisfy the ECO during the application assessment process, then the ECO is not clear about the purpose and might question the intentions of applicant i.e. the applicant is only using Tier 1 Entrepreneur as a route to settle in the UK, without actually doing business in the UK.

Accordingly, from the evidence available with the application and where applicable during the interview process, the ECO can gather together refusal reasons to justify his opinion about the intentions of an applicant. However, for building a line of argument the ECO usually questions the elements of the genuine entrepreneur test, especially the business plan submitted with the application.

Generic Business Plan

Generic Business Plan has been the major source of Tier 1 Entrepreneur Refusals as most of the applicants have not given importance to the accuracy of the elements of the business plan.

Some business plans which are fundamentally wrong in their approach i.e. instead of justifying investment in the UK, the business plan focuses on imports.

In case of Entrepreneurial Teams, both the applicants during the interview give a different version of the business plan.

Insufficient Evidence of Employment Creation

In most of the cases an extension is refused due to insufficient evidence of employment, maintenance or claimed investment.

Shell Companies

Extensions are also refused if the Tier 1 (Entrepreneur) migrants has set up a shell company for meeting the minimum qualifying investment, without any underlying economic activity. In most of the cases, prima facie the shell business creates two jobs; however, the employees are not involved in any meaningful commercial or business activity but are only paid a salary to achieve the objective of meeting the extension and settlement criteria.

Actual and Perceived Abuse of the System

The Tier 1 (Entrepreneur) route is for those who wish to establish a genuine business which intends to generate jobs in the UK. However, during 2008-2012 a significant number of those applying in-country for leave in the route were those that had come to the UK for the purpose of study and made speculative applications simply to extend their stay in the UKAccordingly, those who have been granted leave as entrepreneurs, relatively few have gone on to engage in genuine entrepreneurial activity and a significant proportion have taken employment in breach of their conditions, typically in low-skill occupations.

Impact of Tier 1 Post-Study Work Route

The Immigration Statistics indicates that during the year ending June 2015. 5,026 in-country applications from Tier 1 (Entrepreneur) main applicants were considered, out of which 44 per cent were granted. The number of visas being granted in-country under this route increased steadily between 2008 and 2012, followed by a sudden surge in 2013, which  is closely linked to the closure of the Tier 1 (Post-Study Work) route. There was also a rapid rise in the number of applications being refused in 2013, potentially caused by the introduction of the genuine entrepreneur test. The refusal rate peaked at 67 per cent in the year ending September 2013 before falling back in 2014.

For instance, an applicant initially had leave to remain on a Tier 1 (Post-Study Work) visa which was due to expire in December 2013. In October 2013, the applicant set up a business. As proof of business activity, the applicant provided a contract for marketing and advertising services. However, during the assessment process it was concluded that there was no evidence to suggest that the client had established a legitimate company, or that the two directors of this company. Furthermore, a business owner is required to inform the HMRC if a company is active within three months of starting business. The applicant had not registered with HMRC, so neither the company was active nor the owner had complied with HMRC regulations. At interview, the applicant initially stated that they were going to run a marketing company, but later stated they were looking to run an HR consultancy business and/or recruitment agency. The candidate provided no details as to how the £50,000 would be invested, given that they were running the business from home using a computer, internet connection and printer. The applicant was refused a Tier 1 (Entrepreneur) visa on the basis that their application was not considered genuine.

Tightening of Entrepreneurial Route

Since 2013, the Home Office has introduced a number of measures to tighten the route against suspected abuse. In January 2013, the genuine entrepreneur test was introduced, which included the option for caseworkers to request that applicants attend an interview. Further changes saw migrants unable to switch from Tier 4 unless they had £50,000 funding from a specified source. In July 2014, the Home Office restricted the provision to switch into the category from study categories and the Tier 1 (Post-Study Work) category, pending further investigation and consideration of other remedial measures. Consequently, the number of extension applications reduced from 5,936 in 2013 to only 1,273 in 2015 and success rate nearly doubled in 2017 to reach a level of 67.29%, which in 2013 reached its lowest ebb of 35.92% due to poor quality of extension applications.

Poor Quality of Applications

Applicants switching to the entrepreneurial route from another immigration category, rather than those who applied overseas to enter as a Tier 1 (Entrepreneur), account for the higher proportion of poor quality and potentially abusive applications at the extension stage.

Leakage from the System

Applicants granted initial leave to enter or remain as a Tier 1 (Entrepreneur) migrant is required to apply for extension three years; however, during 2008-2012 relatively fewer apply for extension. The leakage indirectly contributed towards a higher refusal rate of the entry clearance applications as the assessment became more subjective due to rigorous use of genuine entrepreneur test and finding faults in the business plan and during the interview process.

Genuine Entrepreneur Test

The Genuine Entrepreneur Test is quite subjective, therefore, during the assessment process, a number of questions regarding the genuineness of any Tier 1 Entrepreneur Application can arise. For instance, questions about the source of money, education, and skills set of the applicant to run business in the UK successfully, previous experience of the UK, business and marketing research.

Accordingly, the ECO through the paper genuineness test or oral genuineness test can fail any application as ample arguments can be built for either passing or failing a genuineness test. Therefore, it is mostly a gray area and greatly depends on the quality of the documentation and the performance of an applicant during an interview.

Applicants with good track record of working as a businessperson, with adequate education and immigration history have a fair chance to pass the Genuine Entrepreneur Test.

A Subjective Mechanism

The genuineness test as currently practiced brings a level of uncertainty to the route that is not helpful for the applicants, immigration advisers or the businesses involved in the process.

The genuine entrepreneur test is a subjective mechanism to differentiate entrepreneurs who wish to set up a valid business are able to meet the entry criteria.  The genuine entrepreneur test was introduced in Jan 2013 to reduce the perceived abuse of the route. However, since then the Tier 1 (Entrepreneur) route remains highly susceptible to being abused. The process for assessing the suitability of a Tier 1 (Entrepreneur) application is flawed and therefore often fails to differentiate between genuine and non-genuine applicants.

Genuineness of Business Vs. Likelihood of Success

The Government cannot determine ex ante which combinations of applicant and business plan might become commercial successes, nor would it be advisable to aim to do so. Therefore, currently immigration officers aim to assess the genuineness of the business plan rather than its likelihood of success.

Dissuades Potential Entrepreneurs

The complexity of the genuineness test prevents the Tier 1 (Entrepreneur) route from being truly effective. The rules of the genuineness test are overly convoluted and unclear to the extent that they may be dissuading potential entrepreneurs from applying for the visa. There is a distinct lack of clarity in the requirements associated with the genuineness test. Consequently, there is a need for a more structured, transparent guidance to be available to applicants.

Insufficient Training of the Immigration Officers

The immigration officers should be provided with specialist training as insufficiently trained to make decisions about applicants and business plans, not least as a result of the criteria being too subjective.

Who is an Entrepreneur?

There is an ambiguity to clearly define an ‘entrepreneur’ under the Tier 1 (Entrepreneur) route, which has been correctly pointed out in the report of MAC, which states:

There is often an overlap in the definitions of entrepreneurs and the self-employed. However, using the OECD definition above, it is possible to be a self-employed business owner that does not engage in entrepreneurial activity. For example, small business owners may not be considered “entrepreneurial” if they only take on small levels of risk and do not provide new and innovative services.

In practice, any business has a risk and return profile and most of the applicants only intend to establish a similar line of business, which they are already successfully doing in their home country.

Policy Bias Towards High Skill Businesses

Since the differentiation of businesses on the basis of skill level is profusely stated in the MAC Report, which indicates the mind set of the policy makers; however, in the policy guidelines neither differentiate nor prescribed any  preferred economic sectors.

Table 7 illustrates the details of the Tier 1 Entrepreneur Businesses during 2008-15. The MAC findings indicates:

Indeed, there are some highly skilled industries which are more prevalent amongst the businesses set up by Tier 1 entrepreneurs than in the overall UK business population. 8 These include the professional, scientific and technical activities sector and the information and communication sector, which jointly account for approximately 36 per cent of Tier 1 entrepreneurs’ activity. However, there is also a substantially higher prevalence of Tier 1 entrepreneurs in the more generally lower skilled wholesale and retail trade, administrative and support service activities, and accommodation and food service activities sectors.

Table 7 –  Tier 1 Entrepreneur Businesses: Sector, Employment Distribution and Turnover 2008-2015 (Source: MAC)
Business Sector Share of businesses Share of employment Turnover (£000s)
Wholesale and retail trade, repair of motor vehicle and motorcycles 27% 22% 571,650
Professional scientific and technical activities 24% 9% 126,870
Information and Communication 12% 6% 54,410
Accommodation and food service activities 10% 14% 41,060
Administrative and support service activities 9% 9% 111,170
Other activities 3% 1% 5,410
Real estate activities 3% 2% 20,590
Construction 2% 1% 19,880
Education 2% 2% 13,410
Financial and Insurance activities 2% 1% 7,700
Human health and social work activities 2% 7% 14,890
Transportation and storage 2% 2% 11,320
Arts, entertainment and recreation 1% 1% 3,590

Differentiation between start-ups and existing businesses

Another major theme which has created ambiguity about the objectives of Tier 1 Entrepreneur route is the differentiation between business start-ups and existing business. However, on June 13, 2018, the Home Office has announced a new “start up” route, the details of which will be launched in early 2019

The new route, announced during London Tech Week, will widen the applicant pool of talented entrepreneurs and make the visa process faster and smoother for entrepreneurs coming to the UK. It will replace a visa route which was exclusively for graduates, opening it up to a wider pool of talented business founders.

New start-up visa route announced by the Home Secretary

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Related Posts on UK Business Visa:

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  2. Tier 1 Genuine Entrepreneur Test
  3. Tier 1 Entrepreneur Visa ILR Requirements | UK Settlement Set(O)