Friday, 18 July 2014

No more contract work for Tier 1 Entrepreneur visa holders.

Until 11 July 2014 the Immigration Rules were not preventing the migrants from working as contractors. For example, getting an Entrepreneur visa, setting up a ‘business’ while in reality working for a company (‘employer’)  in all but name, so the migrant and the company consider it as employment in reality: going to ‘employer’s premises to work, usually Monday to Friday as if it was employment, having a desk, being paid monthly and most importantly, following the orders of the ‘employer’ with the company deciding on what the contractor is doing from day to day.

Imagine a ‘real’ entrepreneur being told what to do? Besides agreeing with the customer on what has to be achieved, a ‘real’ entrepreneur decides him/herself how to work, when to work, which desk to use or work in a cafĂ© etc. Furthermore, a ‘real’ entrepreneur from the HMRC point of view has more than one ‘customer’ and is certainly not paid every month in what looks like a salary but not called so (it would be called ‘paying an invoice’ but the real meaning remains the same – it is ‘like a salary' in all but  name).

So, a contractor is a person who is self-employed ‘on paper’ but is really like an employee in reality. A good indicator of contract work is a contract between your business and a recruitment agency, which places you to physically work at the premises of, say, Barclays or Jaguar Lang Rover or even the NHS.

This has been changed in the current Rules. The Tier 1 Entrepreneur category was designed for those who want to be a ‘real entrepreneur’ and to run a genuine business. A business which has customers (not those who behave as ‘employers’), which advertises its work and which creates jobs. There is nothing wrong in having several large organisations as customers, such as providing them marketing services (or in case of our company, it is visa services). However, having one ‘customer’ who you have to work for Monday-Friday (or similar) for a year won’t be acceptable.

A contract for service as opposed to a contract of service.

If you are genuinely self-employed, either as a sole trader or by having your own limited company, you would have a contract for service between you and your customer. For example, our company provides a contract (a letter of engagement) for a service of assisting with obtaining a Tier 1 Entrepreneur visa for a migrant or a service of assisting with securing a Tier 2 Sponsor Licence for a company who wants to sponsor the foreign workers.

A contract of service is the one where you are a ‘contractor’ and provide service of yourself (ie of your work and time) to a company. This includes when your ‘business’ are hired via an employment agency on a self-employed basis. This is no longer acceptable for this visa.

When do the changes apply?

In 2 cases:

1)     Once you have secured an Entrepreneur visa, you have to establish a business in the UK within 6 months and have to continue to be involved in business at the point of extension and then an Indefinite leave. A definition of a business does not include doing contract work. At the moment it's not quite clear what to do with those who have already secured a visa using such contracts (those who were switching from Tier 1 Post-Study Work visas, namely).

2)     Those remaining migrants on Tier 1 Post-Study Work visas. Not many of them left now in July 2014 but those who do can only switch to a Tier 1 (Entrepreneur) visa with £50,000 if they already registered a business which was already trading before 11 July 2014. here ‘trading’ also does not include contract work.

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