Under the UK immigration rules, individuals who enter the UK on the basis of the Tier 1 (Investor) category who wish to invest in shares and/or corporate bonds can only invest in those issued by "active and trading UK registered companies".
When the UK government amended the UK immigration rules at the end of March, it made an interesting change to the definition of "active and trading UK registered company". Previously this meant companies must have:
- had a registered office or head office in the UK;
- had a UK bank account showing current business transactions; and
- been subject to UK taxation.
When considering this definition, wealth managers who managed investment portfolios for the purposes of satisfying the Tier 1 (Investor) requirements were always willing to take the view that, if a company had a registered office or head office in the UK and was listed on a UK stock exchange, it must have a UK bank account and be subject to UK taxation. Certainly, I have never seen the Home Office query these criteria when it came to listed companies.
However, the definition now states that an "active and trading UK registered company" must:
- be registered with Companies House in the UK;
- be registered with HM Revenue and Customs for corporation tax and PAYE;
- have accounts and a UK business bank account, both showing regular trading of its own goods or services; and
- have at least two UK-based employees who are not its directors.
This new, stricter definition led many wealth managers to revisit their previous assumptions about UK listed companies and they came to realise that it is virtually impossible to ascertain whether these companies meet all of these requirements on the basis of publicly available information. In particular, there is no way to know whether a listed company has at least two UK-based employees who are not its directors.
In fact, it is common for the listed equity-issuing entity, the group “top co”, to sit at the top of a potentially complex group of companies, within which the top co may not itself be a trading entity. In particular, this top co may not have any employees beyond its company directors.
We therefore approached the Home Office on this issue.
The Home Office confirmed that the intention of this rule change is to allow it to seek further assurances, only where an investment into a company gives particular cause for concern around its genuineness as an active and trading UK entity. The Home Office went on to say that, where an entity has a publicly verifiable status as a major listed UK company, with nationally significant operations of the sort seen in blue chip companies, it is very unlikely to request further evidence to show that it is active and trading.
Accordingly, provided that: the listed company is registered with Companies House in the UK; it is not undertaking an activity which is prohibited under the Tier 1 (Investor) immigration rules, such as investing in property; and if it does not have employees itself, clearly has employees in other companies within the structure, it will be deemed to be a qualifying investment under the UK immigration rules.
This will come as a big relief to wealth managers who operate investment portfolios for those who are in the UK under the Tier 1 (Investor) category as it will be one less thing for them to worry about as they grapple with the other restrictions relating to these portfolios.
Guidance on how staff consider applications in the Tier 1 (Investor) category of the points-based system.