UK: Establishing A Business In The UK – Immigration Issues

Last Updated: 31 December 2012
Article by Tim Hayes


The legal regime for businesses wanting to set up in the UK is complex. However, whilst navigating UK immigration law might appear daunting for overseas businesses, there is a technique to be applied in plotting a successful course to the UK and minimising the risk of any pitfalls. Below, lawyers from our Immigration Team set out a very brief overview of some of the steps overseas companies will need to take in order to employ people from outside the European Economic Area (EEA) in the UK.

How can a non-UK company employ migrant workers in the UK?

In 2008 the UK Government brought in a 'Points Based System' requiring employers to obtain sponsorship licences in order to employ most workers from outside the EEA. Not only has this shifted part of the burden of immigration control onto employers, but it has also added a layer of complication for businesses wanting to enter the UK labour market for the first time, given that many of them will want to bring non-EEA staff with them to the UK.

Companies operating in the UK and wishing to take on most non-EEA workers need to register as a sponsor with the UK Border Agency (UKBA). Due to administrative delays, applications are currently taking some 6 months for the UKBA to decide, and as a result it is important that applications be made as soon as possible. Without a licence, a company will simply not be able to employ the vast majority of non-EEA workers in the UK.

To apply to become a sponsor, the UKBA requires you to have certain key personnel physically located in the UK to provide a point of contact and administer the application process. Whilst BDB can carry out some of those roles on behalf of its clients, the UKBA requires applicants to provide details of an Authorising Officer, who must be a paid member of staff or an officeholder of the applicant company and also based in the UK. They cannot, therefore, be a legal representative, contractor or consultant contracted for a specific project.

There are essentially two options for foreign businesses in order to comply with the 'Authorising Officer' requirement. Firstly, they can employ or transfer to the UK someone to be 'permanently based' in the UK, for example, a British national, a national of a European Union member state or someone who has no time limit on their stay in the UK. However, this might not be practical, as there may simply not be such an employee on the payroll, or it might be impossible to transfer them to the UK or employ them on a long term basis.

The alternative in such a case is to send a 'Sole Representative' to the UK in order to establish the company and deal with the application process. Sole Representatives are a distinct immigration category for those companies not having any presence in the UK who wish to send a senior employee or officeholder to the UK. There are of course a number of individual requirements for Sole Representatives, such as that they cannot be majority shareholders, they must intend to establish a commercial presence for the company in the UK and must have full authority to take operational decisions on the parent company's behalf.

The parent company must have no branch, subsidiary or other representative in the UK (although if the company has a legal entity in the UK which does not employ staff or transact business, this is permissible).

Of course, our specific advice on the appropriateness of either route will depend on individual circumstances.

Documentation to be provided to the UKBA as part of the licence application

Foreign businesses wishing to register as sponsors need to bear in mind that as part of the application process the UKBA will need to see a number of documents relating to the new UK entity. The range of documents required will vary from company to company, but you can expect to have to provide, for example, evidence of a UK corporate bank account, an employer's liability insurance certificate for a minimum of £5m and a certificate of VAT registration, if available.

When you make your application, consider applying for as many categories of the Points Based System as you think you will need going forward. For example, if you only apply to sponsor intra-company transfer employees and not general employees, you may find that you need to make another sponsorship licence application further on down the line, leading to further delay and expense.

Start the application process as soon as possible. The length of time the UKBA is taking to process sponsorship applications shows no sign of coming down and, although the UKBA will expedite applications in a limited number of situations, it is advantageous to start the ball rolling as soon as possible. Remember that once you have obtained your licence your employees will still need to make an application for a work visa to enter the UK, which may lengthen the process by a few weeks. You will also need to assess whether a Resident Labour Market Test is required and we can provide further information about passing this particular test.

Our services to foreign businesses

BDB has wide experience in assisting non-UK businesses which are setting up here. We can guide you through the sponsor licence application process and provide advice in relation to visa applications by your staff. Through our Business Services department, we also offer a wide range of other corporate and commercial services, such as managing the formal procedures necessary to incorporate a company in the UK, providing advice in areas such as tax and employment law, and helping you to find and secure premises from which to trade.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Tim Hayes
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