"Golden visas" lose their lustre: Tier 1 Investor scheme suspended

It was reported on 6 December 2018 that the Home Office had decided to suspend the Tier 1 (Investor) visa category, due to concerns that the investment of the funds required under the scheme was being used to launder money. The scheme is effective from midnight tonight, so advisers are currently trying to submit all client application including the required documentation before the deadline. The Home Office has clarified to the Immigration Law Practitioners Association that the suspension only affects new applicants, not those who are already in the UK on these visas and are seeking extensions for their leave. However, it is not clear yet whether new applications made in time will be reviewed as normal, or whether the suspension also includes consideration of any applications submitted.

It is being reported that the scheme will be supported by an audit system, which will engage independent and regulated auditors to assess the applicants' financial and business interests and check they have had control of the funds for at least two years. Once this audit process has been put in place, the suspension will be lifted.

No explanation has been given by the Home Office as of yet, but the statement from Immigration Minister Caroline Nokes indicates that caseworkers have become concerned that the visa path is open to exploitation. She is reported as saying "The UK will always be open to legitimate and genuine investors who are committed to helping our economy and businesses grow. However, I have been clear that we will not tolerate people who do not play by the rules and seek to abuse the system. That is why I am bringing forward these new measures which will make sure that only genuine investors, who intend to support UK businesses, can benefit from our immigration system." This statement and the announcement of the audit system makes it clear that the Home Office is concerned that people have been able to get visas to live in the UK using funds that might not be fully accounted for or under the applicant's control.

The Tier 1 (Investor) scheme is for those outside of the EEA and Switzerland with access to at least £2 million in regulated accounts that can be spent in the UK. The expectation is that they will be invested in UK government bonds, share capital or loan capital in active UK companies within 3 months from the date. This visa is also a route to citizenship; after 5 years, someone investing £2 million can apply for Indefinite Leave to Remain, but this period of time is reduced to 2 years if someone invests £10 million.

There have been concerns that the benefit to the UK from this visa category is limited; the Migration Advisory Committee in 2014 noted that the direct investment itself is not to the great benefit of the UK, but indirect consumption and VAT by the investor were the key methods of putting money into the country. The Committee further noted the investor route was not designed to generate such benefits. This is also not the first time in recent months that the subject of high net worth migration has hit the headlines. Last month, EU Commissioner Vera Jourova flagged that the EU was looking at closing down "citizenship for cash" schemes in individual Member States. Although the UK scheme was not one of those listed due to its strict requirements, that the UK Government is looking at the potential money laundering risks of its scheme shows how seriously governments are taking the issue of cash being able to buy access to the UK.