[2024] UKUT 00418 (IAC)

The respondent has issued guidance to caseworkers about the Tier 1 (Entrepreneur) route. An extract of the guidance (version 27.0, 6 October 2021) is included in the bundle of authorities and as far as relevant states:

“Director’s loan

This only applies to migrants who become directors of a company. A director’s loan to the company will be considered for the award of points as long as it is unsecured and subordinated in favour of third-party creditors. This means that the loan agreement states that any loans to third parties are to be repaid before the director's loan is repaid.

For the purposes of this guidance an unsecured loan is where the applicant has loaned money to the business that is not secured by property or assets that become subject to seizure on default. Third-party creditors are those individuals or companies that the business owes money to, not including the applicant.

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Evidence for Invested Funds

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Directors Loan

If the applicant has made the investment in the form of a director’s loan, it must be shown in the relevant set of financial accounts provided. Investments made on or after 19 November 2015 must also be shown through readily identifiable transactions in the applicant’s business bank statements, which must clearly show the transfer of this money from the applicant to the business. They must also provide a legal agreement, between them (in the name that appears on their application) and the company. This agreement must show:

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the terms of the loan

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any interest payable

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the period of the loan

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evidence to show the loan is unsecured and subordinated in favour of third party creditors

If the information provided does not clearly show the loan is unsecured and subordinated in favour of third-party creditors, you cannot accept the loan for the award of points. Subordinated loans rank after other debts, should a company fall into liquidation or bankruptcy.”