The UK tops the wish list for global citizens looking to settle in Europe. A mazy road to Brexit and a mere two weeks of fantastic weather for the year won’t change that anytime soon, said John Whick, head of investor visa services at wealth manager Henderson Rowe.
Its strong economy, stable government, skilled and diverse workforce, and excellent schools continue to attract some of the world’s wealthiest people.
London epitomises all of that. It is home to the highest number of ultra-wealthy individuals, topping this year’s Knight Frank City Wealth Index. It ranked first in the wealth and lifestyle categories and second for investment.
London is also the most diverse in terms of its investors’ origins. A strong reason for that is the avenue paved by the Tier 1 Investor Visa.
For the wealthy outside of the UK, the programme offers a direct route to live and ultimately settle in the country – known as ‘indefinite leave to remain’ (ILR) or ‘settled status’ – by investing between £2-10m ($12.9m, €11.5m) in ‘qualifying assets’, as outlined by the Home Office.
Popularity
The popularity of Tier 1 Visas increased from 2010 when other settlement schemes became more restrictive, making it the easiest way to settle and invest for those who have the available means.
In the first half of this year, total Tier 1 Visa applications grew by 36% year-on-year, according to the UK Home Office; applications from China accounted for more than 40% overall.
The programme provides straight-forward rules about how and what to invest in. Yet several pitfalls should be noted, which can result in ILR not being achieved.
Beyond the return clients might generate, that is the ultimate failure which can hugely disrupt an individual’s life plans.
These pitfalls make it imperative that Tier 1 Visa investors seek the appropriate expertise to help them reduce potential risks and make a reasonable return over the period of their investment.
Sidestepping the pitfalls
A top priority for Tier 1 Visa investors is to strictly adhere to anti-money laundering requirements as outlined by the Home Office and regulated by the Financial Conduct Authority.
The FCA requires disclosure of the ultimate source of assets, even if funds may have been in the UK for a number of years.
The inability to provide clear evidence and comply with AML may jeopardise one’s immigration status, not to mention the viability of one’s UK investments.
With AML compliance and various other aspects, attention to detail is essential to the successful completion of a Tier 1 Visa application.
We often see clients failing to have their visa ratified simply because assets that should have been invested were left in cash. This scenario may occur with firms whose individual managers have far too many accounts to oversee or where internal checks are inadequate.
Often managers think they can leave a Tier 1 Visa portfolio invested with little oversight for the five-year period.
However, should a bond within that portfolio mature and the resultant cash be left on the account for over three months, the client then risks falling foul of the rules. Sadly, this is a common mistake that can jeopardise ILR.
Straightforward
Keeping things clear and straightforward is also key.
When submitting documentation to the Home Office, these papers should demonstrate limited complexity and adhere to the guidelines as closely as possible.
There have been many cases over the years that don’t fulfil this basic requirement, leading to application delays or outright rejection.
Focused frame for portfolio growth
The ultimate marker of success on the Tier 1 Visa is obtaining ILR by safely meeting one’s immigration aims and using that as a stepping stone towards obtaining a UK passport.
Targeting and achieving investment returns may, for many wealthy investors, be viewed as a “bonus” benefit, but that should be an opportunity not to be missed.
The aim for Tier 1 Visa investors should be achieving a positive net return when ILR status is obtained.
To that end, a sound Tier 1 Visa account requires a sharp focus by both client and investment manager.
Five-year period
With Tier 1 Visa accounts, we at Henderson Rowe see the five-year period as a window to demonstrate quality investment advice, build strong relationships and grow the service scope beyond the client’s visa portfolio.
To meet qualifying requirements, Tier 1 Visa investors have some latitude to choose from a combination of corporate bonds and equities. Each portfolio can be tailored to meet the client’s requirements by, for example, excluding certain industries or incorporating their own themes.
This article was written for International Adviser by John Whick, head of investor visa services at wealth manager Henderson Rowe.
