If you are planning on applying for indefinite leave to remain at year 3 under the innovator visa (as opposed to simply extending for another 3 years), then you will need to meet two of the seven success criteria. This means that your endorsing body must confirm in their endorsement letter that you have achieved at least 2 of the following:
- at least £50,000 has been invested into the business and actively spent furthering the business plan assessed in the applicant’s previous endorsement
- the number of the business’s customers has at least doubled within the most recent 3 years and is currently higher than the mean number of customers for other UK businesses offering comparable main products or services
- the business has engaged in significant research and development activity and has applied for intellectual property protection in the UK
- the business has generated a minimum annual revenue of £1 million in the last full year covered by its accounts
- the business is generating a minimum annual revenue of £500,000 in the last full year covered by its accounts, with at least £100,000 from exporting overseas
- the business has created the equivalent of at least 10 full-time jobs for resident workers
- the business has created the equivalent of at least 5 full-time jobs for resident workers, which have an average salary of at least £25,000 a year (gross pay, excluding any expenses)
I have emboldened the three ones which are most likely to apply to you (and most innovator visa applicants). If you are going for the employment one (7) then the R&D one (3) becomes academic.
Proving “significant research and development activity” (and application for IP protection)
The most obvious example of a business that satisfies criterion (3) would be a business that does lab work on some kind of technology, which is then developed and there is an application for a patent to protect it. But in my view it would also in principle be acceptable to apply a conventional SaaS / software development cycle, such as:
- User research concerning an intended unique user interface for a platform;
- Development of a prototype user interface on the basis of the user research;
- User testing (including A/B testing) on the prototype;
- Applying this user testing to the release of an alpha and then beta version of user interface;
- An application for intellectual property protection for the user interface, in the form of an application to register it as a unique design.
In this example, you can see that there is a link between the R&D and the eventual application to protect the IP in the asset which is produced. This would mean in practice linking from the outset the software development function of the business with the R&D aspect of the business, so that it is all one continuous process. I do not think that an application for a trademark or simply automatically acquiring copyright would be capable of qualifying.
It is important from the outset to consider whether you will want to rely on this success condition, or whether it is going to be more straight forward for you to rely on the employment success condition (number 7). You could then start planning accordingly.
Whichever 2 of the conditions are going to be met, it will be important to involve your endorsing body at the beginning, since it will be them who you will eventually be asking to confirm (if it is the case) that you have met the conditions. Much better to involve them early rather than later.
In relation to each of the criteria, there will need to be a body of evidence documenting how they have been fulfilled. This will ultimately mean accountancy evidence. In relation to the financial and employment conditions, both your endorsing body and the Home Office will want to see evidence produced by an accountant to show that they have been met. So it is best to start planning this now.
Proving the investment of the £50,000
Before the end of the 3 year term it will need to be shown (if the £50k success condition below is chosen) that at least £50,000 has been invested into the business and actively spent furthering the original business plan as assessed in your previous endorsement. I would suggest that in many cases the most straightforward way to evidence this would be for £50,000 equivalent to go from a bank account in your (the applicant’s) name (i.e. your own personal bank account), into the company’s bank account, and then spent on specific matters which are identified in your original business plan as endorsed. These matters will need to be carefully specified and highlighted. General spending will not qualify, it must be only matters specifically referenced in the business plan. Then the invoices from the third parties who charge the sums which cumulatively amount to at least £50,000 equivalent will need to be collected into a presentable packages and referenced to the payments shown in the company’s business bank account statement.
This means that in the end you will have:
- Proof of you (as the applicant) having transferred the money from a bank account in your name, into the company’s bank account;
- Proof of invoices showing that same money being paid by the company to third parties (i.e. “actively spent”), i.e. this money must be traceable back to the minimum £50,000 which you originally transfer;
- Proof of the relevant invoices evidencing those sums;
- Proof that the invoices relate to matters which were specifically referenced in the business plan (e.g. specific software development work which was referenced).
The safest approach is that the money is money to which you (as applicant) are legally and beneficially entitled at the point that it is transferred to the company. The money should not be in the form of a loan either:
- to you, i.e. you should not have received it as a loan;
- to the company, i.e. it should not be a loan to the company; or
- from the company to the third party (i.e. that must be “actively spent” and not in the form of a loan).
It may be expedient depending on the facts to have a specific company business account set up for the qualifying minimum qualifying £50,000 investment. Otherwise the qualifying £50,000 investment pay become ‘mixed’ with sums from other sources and it then may be difficult to trace the spending back to the £50,000 which was invested by you into the business. It may be that the initial £50,000 is paid as share capital in the first instance, and then the spending tracked and evidenced against the invoices in the way I have suggested.
Proving that the business has created the equivalent of at least 5 full-time jobs for resident workers, which have an average salary of at least £25,000 a year (gross pay, excluding any expenses)
I would suggest that you have a buffer here both in terms of the number of workers (in case one drops out) and in terms of the timeframe. I would suggest that it would be optimal:
- to have the five people in their roles at the point of application (i.e. that they not be historical roles where one or more have since resigned);
- to have engaged them each for at least a year at the point of application;
- [it follows from this that] to initiate recruitment immediately so that by year 1.5 you have engaged the full team of 5 (or 6 or more depending on the buffer needed) by year 2.5. Of course, this will be led by your commercial considerations, but some element of immigration forward planning may be appropriate.
Other important points: “active and trading” and “significant achievements”
Remember that in addition to the success conditions, you will need to meet the other criteria at page 24 of the guidance, including:
- the applicant has shown significant achievements judged against the business plan assessed in their previous endorsement
- the applicant’s business is registered with Companies House and the applicant is listed as a director or member of that business
- the business is active and trading
- the business appears to be sustainable for at least the following 12 months based on its assets and expected income, weighted against its current and planned expenses
- the applicant has demonstrated an active key role in the day to day management and development of the business
“Active and trading”
Possibly the most important aspect of this is ‘active and trading’. Trading denotes buying and selling. So you will need to have started selling and have paying customers, and be able to show accounts / business bank account statements to prove this. Since these visa routes are about scalable businesses, I would expect the sales to be sales of the actual product, rather than, e.g. consultancy-type services. For this reason, from a visa perspective I would plan to have the actual product / platform actually built and to have started receiving income before you get to the point of applying for indefinite leave to remain. Again, the accountancy evidence would be needed to prove it. To be on the safe side, I would recommend planning to do this by year 2.5 of the visa to avoid any last minute rush.
If the name of your business ends up being different from the name specified in your business plan, then I would recommend getting your endorsing body to confirm when you apply for indefinite leave to remain that it is the same enterprise as covered in the original business plan that was endorsed.
You would need to also show that you have made ‘significant achievements’ under the business plan which was endorsed. Again, the endorsing body would be confirming this so it makes sense to plan it out now with your endorsing body contact, i.e. your plan for how you will do what you said you would do in your business plan.
If, rather than applying for indefinite leave to remain, you wanted to simply extend your visa for another 3 years, then you would need to apply under the criteria set out at page 21 and 22 of the guidance. You would not need to satisfy the success criteria but you would still would still need to show for this that you had made ‘significant achievements’ under the business plan which was endorsed, and that the company was active and trading, etc.
“Active key role in the day to day management and development”
You will need to look ahead to see how you can evidence this upon any challenge. Ideas you may want to consider (besides producing reams of emails) are:
- Minutes of any director meetings;
- Records of Zoom / other video calls;
- Calendar print outs covering material periods.
Feel free to email me if you have any questions.