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An analysis for overseas businesses contemplating expanding into the UK
Ever since 2008, when the Home Office introduced the original Points Based System and, with it, the concept of work sponsorship by a UK based employer, it struggled to find a place within this structure for overseas businesses that want to expand into the UK. It couldn’t work out who should act as the UK based sponsor for an overseas business that did not yet have a presence in the UK.
So they kept the existing tried and tested ‘Sole Representative’ visa route open. Until April 2022, that is, when it replaced it with the Global Business Mobility; UK Expansion Worker visa route.
UK footprint
The way in which the Home Office solved the problem was to require the overseas business to apply for the sponsor licence, after it has put in place a UK ‘footprint’ but before it has started actively trading in the UK. What this means is that getting the timing right is critical.
The overseas business can achieve a UK footprint by either:
- acquiring UK business premises – for example, a lease agreement or documents showing it has purchased the premises; or
- registering its’ UK business with Companies House as either an overseas company branch or a new company that is a subsidiary of the overseas linked business.
Genuine business
In addition to establishing a UK footprint, the overseas business has to make a selection from a lengthy and convoluted list of further documents that need to be provided in support of the application. Unsurprisingly, given the Home Office’s voracious appetite under the Sponsor Licence regime for evidence, the amount of supporting evidence far exceeds that needed under the defunct Sole Representative visa.
Any documents not in English must be accompanied by certified translations.
According to the Home Office, the amount of supporting documents is designed to demonstrate that the overseas business has:
- an overseas trading presence; and
- credible plans to expand to the UK and establish a trading presence within two years.
Overseas trading presence
The overseas business needs to demonstrate that they have been active and trading for at least three years. They have to do this by
providing evidence that they have been trading throughout the 12 month period immediately before the application, and also evidence that shows the business (a) was trading at the start of the three year period before the date of application and, curiously, (b) was actively trading throughout that three year period (despite having to provide evidence of trading for the last 12 months). This exposes a shortcoming of this visa route – it is not generally open to young companies less than three years old.
Credible expansion plan
The overseas business must show that they genuinely intend, and are able, to expand to the UK and establish a UK trading presence within two years. They need to provide, among other things, a detailed business plan for the expansion, summarising the last 12 months’ activity of the company, its financial position, the reasons for expansion, the proposed overall investment in the UK and projected operating costs or expenditure for at least the first 12 months of operating in the UK and evidence of their capability to fund it.
The planned expansion must be in the same type of business that they conduct overseas and cannot be a new business venture by the company. The business being established in the UK must be either wholly owned by the overseas business or part of the same legal entity (such as a branch).
If the sponsor licence application is successful, the licence will be valid for four years, in common with other sponsored work routes. However, it is not possible to apply to renew the licence for this route at the end of the four years.
Key Personnel
In common with other sponsored work routes there must be an Authorising Officer, a Key Contact and at least one Level 1 User in place when the overseas business applies for their licence. If there is no suitable person based in the UK who can take the role of Authorising Officer, it will be a senior employee who is being assigned to the UK to oversee the expansion. This employee will also have to be the Level 1 User.
The overseas business will only be permitted to sponsor as many people as they genuinely need to establish its business in the UK, up to a maximum of five. Individual workers within this limit can be replaced (for example, if a sponsored worker leaves the company or returns to their employer overseas) but the business will not be permitted to sponsor more than five workers on this route at any one time.
As the purpose of this route is to enable genuine overseas businesses to expand to the UK, they are expected to have established a full trading presence in the UK within two years from the date the licence was granted. After then the business will be unable to sponsor any applications from new workers, or extension applications from existing sponsored workers, on this route. It is expected that once the overseas business has established a trading presence it will apply to add other routes to its licence (for example Skilled Worker or Senior or Specialist Worker) and the sponsored UK Expansion workers can apply to switch to these routes if they meet the relevant requirements.
In any event the maximum length of time an employee can have under a UK Expansion Worker visa is two years.
Eligibility criteria for visa
Employees of the overseas business need to meet the following criteria, among others, to be eligible for a UK Expansion Worker visa:
- have worked for the overseas business for at least 12 months, unless they will be earning £73,900 or more;
- the job the applicant is being sponsored to do must be skilled to RQF level 6 or above (graduate level) (as opposed to RQF level 3 under the Skilled Worker route);
- the worker’s salary must equal or exceed both:
- the general salary threshold of £45,800 p.a. (with effect from 12 April 2023); and
- the going rate for the applicable Standard Occupational Classification code; and
- there is no English language requirement.
Summary
As will be evident, securing the appropriate visas for the employee(s) selected to lead the push into the UK market is not just a matter of filling in a form. The preparation of an application for a GBM: UK Expansion Worker sponsor licence and the corresponding visas for the employees being sent is a significant and time-consuming commitment, requiring intense attention to detail. A single incorrect detail or inconsistency could lead to a refusal and a possible six month cooling off period before the company can submit a fresh application.
What is more, the application needs to be prepared at the same time as the overseas business will be assessing the UK as a viable market, seeking advice on all the other legal, tax, accounting and regulatory matters that are relevant to the proposed entry into the UK economy. Early planning is essential, in particular to coordinate the timing, for the opportunity window between establishing a UK footprint and commencing active trading, within the overall project schedule.
At the date of writing only 75 GBM: UK Expansion Worker licences have been granted since the route opened on 11 April 2022, approximately half of the number of Sole Representative visas being granted each year before that route’s closure. Only time will tell whether this small take-up is attributable to the way this visa route is structured, or possibly to the reduced attractiveness of a post-Brexit UK as a launch-pad for expansion into the EU.
If you would like to discuss any aspect of the UK Expansion Worker visa route, or anything else, please do get in touch with our immigration team.
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