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The Government recently announced the launch of a two-year pilot scheme to attract entrepreneurs with “innovative business ideas” to the UK. The scheme, which will begin on 4 September, introduces the first new immigration category since the ‘investor’ category in October 1994. The Government hopes the ‘innovator’ category will plug the gap in the immigration rules, which makes it difficult for many foreign nationals to set up new businesses in the UK.Under the existing rules, a businessman can establish a business in the UK if he is prepared to invest £200,000 of his own money into the business and can create jobs for at least two UK residents. An entrepreneur can come to the UK as an investor, but he must have at least £1m; £750,000 of which must be invested in UK government bonds or share or loan capital of UK registered companies. Employees are dealt with under the work permit scheme. A typical innovator is not an employee. He will be the driving force behind and a major shareholder in the business. To meet the requirements of the work permit scheme, the individual would have to be a genuine employee and have a shareholding compatible with that status. The Department for Education and Employment (which administers the work permit scheme) has been flexible pending the introduction of the innovator pilot scheme, but is uncomfortable approving permits where the individual has a substantial shareholding. Typical innovators have not yet made their fortune and are unable to meet the financial criteria of the ‘businessman’ and ‘investor’ categories. Most innovators will be relying heavily on private equity houses to supply the necessary capital for their business venture. The innovator pilot scheme has been drafted with these issues in mind and is the product of close co-operation between various government departments. To be considered under the new scheme, the applicant will have to satisfy three basic requirements: He must maintain a minimum 5% shareholding of the equity capital; demonstrate that the proposed business will lead to the creation of at least two full-time jobs; and show that he can maintain and accommodate himself and his family until the business provides him with an income. The Government looked at a number of overseas models for assessing proposed business ventures and has decided to use a points-scoring system, similar to the Canadian system. A successful applicant must achieve a minimum score in each of three separate areas and a higher overall score. The three areas are: personal characteristics (business experience, educational qualifications and proven entrepreneurial ability); the general business plan (including evidence of the technical, commercial and financial viability of the plan and proposals for the establishment of a management team); and the economic benefits of the business plan (the number and skill levels of the jobs that will be created and the innovative aspects of the proposals). The pilot scheme will be run by the Business Case Unit of the Home Office in Croydon. The Business Case Unit has been revamped and is keen to receive applications under the innovator category. In line with the Government’s more relaxed attitude towards business immigration generally, the Home Office has indicated that applications from potential innovators may be accepted while they are already in the UK, unless they are here in the capacity of visitors. Normally applications should be made from the innovator’s nearest UK diplomatic post overseas. The Business Case Unit is aiming to turn around these applications within two weeks from the date of receipt by the Home Office. Obviously, if an application is submitted overseas, there will be some delay while the UK diplomatic post forwards it to the Home Office. As with all applications, the more documentary evidence that can be supplied with the application, the better. Certainly, it will be necessary to provide academic certificates, employers’ references, research, financial and technical references, a full business plan containing a marketing plan and evidence of the individual’s shareholding in the proposed company.Under the pilot scheme, innovators will be given leave to remain in the UK for an initial period of 18 months, which can be extended to four years on application. After four years, innovators may apply to stay in the UK indefinitely. The Government hopes the pilot scheme will attract a large number of entrepreneurs to the UK, particularly in the science, technology and e-commerce sectors. With less than a month to go before its introduction, immigration practitioners are advised to start preparing applications now. Julia Onslow-Cole is a partner and head of the global immigration department at CMS Cameron McKenna.

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