The current Tier 1 (Investor) scheme allows applicants to obtain a visa to the UK provided they can demonstrate that they have £1 million of their own funds or funds which have been loaned to them by a UK registered financial institution. They are then required to invest a minimum of 75% of these funds in UK government bonds (otherwise known as gilts) or loan or share capital in UK registered trading companies.
In considering the question by the Government, the MAC looked into the current scheme and its disincentives, the benefits to the UK of this route, the factors affecting these benefits, and investors' motivation for investing in the UK. Following its assessment of these various factors, the MAC has made the following recommendations:
Given the limited number of visas available, determining which applicants will be granted a visa would be by auction with places going to the highest bidder. It is not clear what due diligence, if any, will be undertaken to confirm existence of the funds or the suitability of the applicant. So, potentially, an investor could win the bid only to have their application for entry clearance refused. The MAC refrained from making a recommendation as to whether dependants of investors would be able to obtain settlement at the same time as the main applicant.
For a comparison with the current scheme please click here.
The issues with the current scheme were put to the Government by Penningtons Manches last year and proposals on how the scheme can be enhanced were put forward. However, although some of the MAC recommendations do adopt these proposals, others do not. It remains questionable whether the recommendations will be implemented by the Government.
The MAC identified that the factors influencing investors' decision to come to the UK are stability, security of assets and a high quality education sector. However, the disincentives with the current scheme such as the inability to obtain accelerated settlement for dependants, stringent resident requirements, inflexibility on the type of investments and comparatively high financial threshold may mean that these investors opt to go to other countries with more attractive investment schemes.
To see how the UK compares with other countries, we have digested the figures provided by the MAC and summarised this in the attached table.
Those considering the Tier 1 Investor visa are urged to seek legal advice immediately.