“Genuine trading “with reference to start-ups; overseas businesses establishing a UK presence; pre-revenue businesses; early-stage technology companies; and newly incorporated entities seeking Skilled Worker licences.
UK Visas and Immigration (UKVI) has significantly escalated pressure on start-ups and new companies through strict enforcement of its “genuine trading” rules to crack down on immigration abuse. UKVI seems to be giving less weight to the commercial realities considering the size, nature and business models.
A core test of genuine trading under the Companies Act 2006 is whether the directors carry on business with a reasonable expectation that the company can pay its debts. That is not however the way UKVI interprets the expression.
The Home Office had historically expected sponsors to submit evidence demonstrating an active trading presence, such as corporate bank statements, employers’ liability insurance, VAT registration documents, audited or unaudited accounts, business premises evidence, contracts with clients, invoices, HMRC registrations and proof of PAYE systems.
However, the Home Office has introduced a new formal definition of “operating or trading”. Up till then, immigration practitioners had the ability to infer and interpret the lack of a clear definition in their client’s favour.
Whist on the one hand the guidance now expressly recognises that an organisation does not necessarily need to be fully revenue-generating in order to qualify for a sponsor licence, the insertion of a formal definition significantly increases scrutiny and compliance across the board.
UKVI looks closely at red flags like circular trading—where a business gets most of its income from linked entities under common ownership rather than independent clients.
You do not need a long revenue-generating history. Start-ups and pre-operational businesses can qualify if they show genuine operational intent and credible plans to trade.
At Redfern Legal we can expressly extend a list of working examples of situations in which it is likely or unlikely to accept that a business is genuinely trading.
In practice, this is likely to involve more detailed compliance visits, greater emphasis on documentary evidence and more rigorous assessments of whether a business is genuinely operating in a manner consistent with its sponsorship activities.
Our dedicated team of specialist immigration Practitioners are on hand to advise and assist you. We welcome the opportunity to offer a sense of certainty in a less-than-ideal immigration climate.
Contact:
For more information contact: Tom Redfern, Senior Partner +44 (0) 203 617 9271 / tredfern@redfernlegal.com
Yulia Gutkovich, Senior Solicitor +44 (0) 203 617 9271 / ygutkovich@redfernlegal.com
Laura Butcher, Senior Immigration Specialist +44 (0)7851630770 / lbutcher@redfernlegal.com
