Immigration minister Mark Harper said that the changes were a response to evidence that the route was being targeted by applicants seeking to abuse the rules.
A 'genuine entrepreneur' test will be introduced from today, giving UK Border Agency (UKBA) caseworkers the ability to test the credibility of applicants they deem "suspicious". Entrepreneurs, including those who have already been granted indefinite leave to remain in the UK, will also have to meet the necessary minimum funds requirements, as set out in Appendix A of the immigration rules, on an ongoing basis rather than solely at the time of application.
Harper said that the changes would not discourage "genuine entrepreneurs with the ideas and motivation to drive economic growth".
"It is clear that, following our tightening of other migration routes, the Entrepreneur route is now being targeted by applicants seeking to abuse the immigration rules," he said in a written ministerial statement. "There is strong evidence that funds to prove eligibility are being recycled amongst different applicants and that artificial businesses are being created. We need to tighten the current rules to allow for a meaningful assessment of the credibility of an applicant for this route."
The changes apply to migrants who wish to establish, join or take over one or more businesses in the UK and who are entering the country under Tier 1 of the PBS. This route, which replaced the previous "highly skilled migrants" category in April 2011, had "successfully brought about a steady increase in applications from overseas" since its introduction, Harper said in his statement.
Immigration law expert David Brannan of Pinsent Masons, the law firm behind Out-Law.com, said that the changes were a "fundamental break" with the normal requirements under the points-based immigration system (PBS). Immigration officers have traditionally only been allowed "minimal" discretion over a migrant's eligibility, he said.
"The key change is that discretion is being introduced into the rules so that the entry clearance office will have to make a judgement call on whether the applicant is a genuine entrepreneur," he said. "No specified documents are required so it will be up to the applicant what to provide. Up to now, point based system applications have been decided on whether specific documents have been provided."
According to the Home Office's statement of changes (12-page / 431KB PDF) to the rules, immigration officers will be able to take into account whether the applicant's business plan is "viable and credible". They may also consider previous educational and business experience, immigration history, the applicant's previous activity in the UK and any other "relevant" information.