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Rupert D’Cruz QC succeeds at the Court of Appeal in quashing the Home Department’s disqualification of a £100 million+ investor visa scheme

11.05.21

Rupert D’Cruz QC of Littleton Chambers, leading Ramby de Mello of No 5 Barristers Chambers, succeeded in overturning a decision of the Home Department to disqualify a large investment scheme devised to support Tier 1 Investor Visa applications.

The Appellant and more than 100 others invested over £100 million pounds in an investment scheme that was designed to secure points for Tier 1 Investment Visa applications. This was a test case as to the validity of the scheme for this purpose.

Under the Immigration Rules in force at the time, a Tier 1 Visa (and, with it, the right to remain in the UK) could be acquired if applicants invested at least £1 million in active trading UK companies. However the Rules:  (i) also required that the investment be ‘under the control’ of the investor at the time of investment’; and (ii) excluded investments made through 4 types of investment vehicles, each of which shares a common trading characteristic of accumulating funds from several investors and using  their pooled funds for onward investments of various kinds.

Under the scheme in question investors entered an agreement by which Company A agreed to loan each of them (at least) £1 million to invest in an active trading UK company. In each case, the loan funds were transferred directly by Company A to Company B (an active trading UK company) on the instructions of the investors. Company B was an affiliate of Company A. The transfers to Company B were made pursuant to separate loan agreements between the investors and Company B, by which the investor agreed to lend Company B the same loan amount borrowed from Company A.

Company B used the loan funds, principally, to trade in securities listed on the Russian stock exchange.

The Home Department refused the Appellant’s application for further leave to remain in the United Kingdom on the basis that: (i) her loan to Company B was not under her control when it was invested in Company B because there was deemed to be a requirement in her loan arrangement with Company A that the loan to her be invested in Company B; and (ii) the loan to Company B was deemed to be an excluded investment, because Company B’s trading activities shared common characteristics to those of the excluded investment vehicles.

On a Judicial Review, the Upper Tribunal upheld the Home Department’s decision.

In a judgment handed down on 11 May 2021, the Court of Appeal overturned that ruling and quashed the Home Department’s decision on the basis that:

• The issue of control had to be judged against the objective of the Tier 1 Investment scheme: to attract funding for, inter alia, active trading UK companies. In that context it did not matter which particular active trading UK company an investment was made, or, therefore, that an investor had entered into an arrangement restricting her investment to one particular company.
• Applying the natural and ordinary meaning of the relevant rule, the Immigration Rules excluded loan investments in particular categories of investment vehicles (none of which, it was accepted, Company B fell into). They did not disqualify investments in vehicles with particular characteristics. If that was the Home Secretary’s intention, it needed to be spelt out in the Rules.

Please click here to view the full judgment.