This page contains the guidance for caseworkers considering applications from persons intending to establish themselves in Business under Provisions of EC Association Agreements.

INTRODUCTION

EC Association Agreements ("ECAA")

The agreements with Bulgaria and Romania came into force on 1st February 1995. The Agreements are drafted in very similar terms. Each agreement contains provisions on granting rights of establishment to Bulgarian and Romanian nationals in all EU Member States In this context, "establishment" means the right to pursue economic activities in a self-employed capacity..

Non-discrimination

The establishment provisions ensure that self-employed ECAA nationals are not to be treated in a discriminatory fashion. Each Member State is required to ensure that Bulgarian and Romanian companies and nationals are treated no less favourably than its own companies and nationals, both in their establishment and in their operation.

Entry controls

A right to enter and reside in the Member State is implied in the Agreements, as a corollary of the right of establishment. A Member State is not prevented from applying national rules governing entry to and residence in the State. National rules should not however effectively nullify or impair rights of self-establishment. The ECJ has confirmed [1] that UK is able to apply the entry controls set out in paragraphs 211 to 216 of the Immigration Rules (HC 395). These set out the requirements for leave to enter the UK as a person intending to establish himself in business under the provisions of an ECAA. Business means an enterprise as a sole trader, a partnership or a company registered in the UK. Dependants are dealt with in paragraphs 240 to 245 of the Immigration Rules. [1] ECJ case C-257/99:Barkoci and Malik

Public policy proviso

The right of self-establishment may be limited on grounds of public policy, public security or public health. The relevant test is the EU public policy test (see EDI Chapter 3).


ENTRY CLEARANCE APPLICATIONS

The requirements to be met by a person seeking leave to enter the UK to establish himself in business under the ECAAs are set out in Part 6 of the Immigration Rules. A person who intends to establish himself in a company in the UK, which he effectively controls, will need to meet the requirements in paragraphs 212 and 213. A person who intends to establish himself in self-employment or in partnership in the UK will need to meet the requirements in paragraphs 212 and 214. Caseworkers considering entry clearance applications must refer to these paragraphs when reading the advice in this section.

Further guidance is also detailed below.

The following factors must be taken into consideration in decisions on applications under the ECAA:

Issue of entry clearance:
 

• Entry clearance is mandatory
• An entry clearance officer must take a decision on entry clearance. He must act in accordance with the Rules and is not able to exercise discretion outside the Rules as such decisions are reserved to the Home Secretary. Where the entry clearance officer takes a decision under the Rules there is no bar to his seeking the views on the application from IND, but the entry clearance officer is responsible for the decision itself.
• Entry clearance is issued on the basis of a particular business and the applicant must be advised that he must seek Home Office permission if he wishes to change, after entry, to a different business.

Approach to assessing compliance with the Immigration Rules:
 

• The onus is on the applicant to show that he meets the requirements under the Immigration Rules.
• The entry clearance officer may look behind any evidence provided by an applicant in order to satisfy himself that the requirements under the Immigration Rules have been complied with.
• The circumstances of the application should be looked at as a whole by reference to the requirements under the Immigration Rules.
• The ECO should not grant entry clearance if he is not satisfied that the application is a credible one and that the applicant really will be able to comply with the requirements in practice.
• The ECO?s decision should be based on a reasonable judgement, which assesses the strength of the application overall.

Indicative evidence required for an application to be successful

This evidence should either be in the form of reliable documentation (see section on forgery below) or established to the satisfaction of the ECO through an interview of the applicant. The evidence listed is indicative only; an applicant should not be refused solely on the basis that one piece of evidence listed here has not been provided, unless that evidence is critical to the credibility of their application. Equally some applications may require further specific evidence depending on their particular nature. For example, if an applicant was applying to establish themselves in a capacity where specific qualifications would be required in the UK in order to work in that capacity, evidence of such qualifications, or equivalent qualifications that would be recognised in the UK, would need to be provided.

Evidence which might be required in order to demonstrate compliance with the rules governing funding, ability to maintain the applicant and his/her dependants, and ability realistically to establish (under paragraph 212 and 213 or 214) might include:

Funding

 

• 6 months' bank statements;
• a letter from the bank confirming status of account;
• work history;
• detailed financial records of companies currently owned;
• a credible explanation of any extraordinary payments evident in a bank statement which cannot readily be attributed to the work history or business interests of the applicant
• where the applicant is taking over an existing company, or taking over or joining an existing business a written statement of terms on which applicant is to take over business and audited accounts for previous years (under paragraphs 213(vi) and 214(v) only).

Establishment
 

• detailed breakdown of set-up costs of the intended business in the UK
• proper understanding of practical and financial requirements for establishment in the UK
• timetable for establishment
• projections regarding performance over the first 12 months of operation which takes account of all potential expenses (such as overheads, administration, and marketing) and which convincingly demonstrates a reasonable chance that profits will be such as to maintain the applicant and any dependants over that time (see cost of living section below)

It is important that if required any applicant is able convincingly to demonstrate an understanding of any written evidence submitted on his behalf.

Worker status
Rights of establishment under the ECAAs relate only to self-employment. This should not amount to concealed employment. There is no identifiable sole determining factor for distinguishing employment from self-employment, but there are a number of indicative factors. When trying to establish an individual's status, these factors should first be considered in turn in light of the circumstances of the applicant. Then the whole picture should be examined to establish whether the overall effect indicates a person who is employed or who is self-employed.

Factors indicating self-employment :

 

• A lack of control or supervision over work
• Work being incidental to the business activities of the company receiving the services
• The provision of one's own equipment
• Terms of engagement for a limited period or a specific assignment
• The ability to provide services to other companies simultaneously (or in sequence)
• Being under no obligation to accept work offered
• Having flexible work routines without fixed hours
• Payment on a fee basis or on the basis of the amount of work completed
• Lack of benefits such as sick pay and pension contributions
• Being able to influence the profitability of the work and being responsible for management and investment decisions
• Having contractual terms indicating self-employment
• Being responsible for one's own liabilities and carrying appropriate insurance
• Putting in capital and assuming financial risk
• Being able to sub-contract or use one's own employees to perform all or part of an assignment
• Having a personal business address, business stationery etc.
• Agreeing with the Inland Revenue to tax on Schedule D basis
• Being registered for VAT purposes

Other relevant considerations when assessing the overall credibility of the application and the ability in practice to comply with the requirements of the Immigration Rules

Cost of living

Assessments of the adequacy of the funds available and those to be generated by the business once established to maintain the applicant and their dependants must take into account the general cost of living in the UK (including any regional variations). The credibility of any proposed arrangements for major expenses such as accommodation should be examined. The potential income of dependants should be discounted when assessing the adequacy of the funds generated by the business to maintain the applicant and dependants, but not discounted when assessing the funds available to maintain themselves when establishing the business.

Previous immigration history

Previous immigration history may be taken into account in assessing the intention behind the application, the applicant's potential to establish the business, and therefore the overall credibility of the applicant. As such it may point towards further investigation and exploration of particular aspects of the application. But a "negative" history, including previous unlawful presence in the UK cannot, in itself, be conclusive in refusing an application.

Circumstances of the content of the application and manner of its delivery

These may be relevant to an assessment of the overall credibility of the applicant, When, for example, it is apparent that the individual does not match up to the profile suggested by a pro forma business plan which may have been prepared by another party (whether paid or unpaid), it would be appropriate to discount such a plan in the overall assessment of the application. An inability to demonstrate understanding of the plan would cast doubt on whether the applicant could be expected in practice to put it into place. However it would not be impossible to demonstrate compliance with the rules when an application is prepared in conjunction with another party and contains similarities to other plans previously or simultaneously submitted.

Proficiency in English

Fluency in English cannot be an absolute test for the application, but it is reasonable for the level of proficiency to be taken into account as part of the assessment. If it is apparent that the applicant has little or no English, this should be looked at in the context of the nature of proposed business alongside the other considerations that would determine its viability. It should be borne in mind that an inability to speak good English may not necessarily be an insurmountable barrier to successful establishment in some circumstances. However, in others it would clearly present severe difficulties. The level of proficiency would also be of relevance in consideration of aspects such as the timetable for establishment and the rate of growth of the proposed business, which would be significant when considering whether the applicant has sufficient funds to maintain him/herself and any dependants.

Experience in sector / Qualifications

These should also be examined in the context of the proposed business alongside the other considerations that would determine its viability. It is possible to demonstrate an ability to establish without prior experience in some circumstances; equally it is clear that success in others would require considerable experience and/or formal qualifications. Any such qualifications would need to be recognised in the UK and acceptable for the purposes for which it is proposed that they are to be used.

Forgery / Falsification of documents

ECOs should be aware of all current guidance regarding forgery and falsification of relevant documentation, and should take expert advice, whether locally or elsewhere, whenever there is doubt regarding a document submitted as evidence. This is especially so when a document is considered to be critical to the application.
 

GUIDANCE FOR SWITCHING CASES

Applications to establish under ECAA in-country ("switching") - guidance

1. This guidance applies to persons seeking leave to remain under the ECAA self-establishment category whilst in the United Kingdom ("switching"). It covers those here lawfully in another category, and those here unlawfully, whether as illegal entrants, overstayers, or those in breach of their conditions of entry.

2. The Immigration Rules state that a person is not able to switch into an ECAA category. Under paragraph 217 of the Immigration Rules (requirements for an extension of stay in order to remain in business under the provisions of an ECAA) the applicant must show that he has entered the United Kingdom with a valid UK entry clearance as a person intending to establish himself in business under the provisions of the ECAA. Therefore, a person seeking to switch into the ECAA category should normally be refused on the grounds that they do not hold EC in that category.

3. However, it is necessary to consider the proportionality of the decision as a whole before it can be refused. When seeking to do this, a distinction should be made between cases involving those who are in the UK lawfully, and those who are here unlawfully.

Lawful cases

4. For lawful cases, the "clear and manifest" test should be applied (see below). If the test is passed, the application should be granted unless it falls to be refused on grounds on public policy, public security or public health (using the EU public policy test (see EDI Chapter 3)). If it is failed, the question of whether they might have a realistic claim under the European Convention on Human Rights ("ECHR") should be examined. Article 8 of the ECHR might be particularly relevant. (see IDI Chapter 1 Section 10).

Unlawful cases

5. For unlawful cases, the "clear and manifest" test should not be applied immediately. The ECJ has held that such persons place themselves outside the protection of the Agreement by being here unlawfully or breaching their conditions of entry. Nevertheless, it is necessary to consider whether it would be disproportionate to send such a person back to his country of origin to apply for EC in the ECAA category. Again, the question of whether there might be a realistic claim under the ECHR can help to inform this question. If the answer is no, the application can be refused without further consideration. If the answer is yes, then the caseworker should take account of all relevant considerations in deciding whether it would be proportionate to send the applicant back to his own country to apply for entry clearance, including whether he passes the "clear and manifest" test. The seriousness of the breach of immigration laws will also be one of the factors to take into account and may mean that it would be proportionate to require a person who is present unlawfully to return to his country of origin to apply for EC even if he passes the clear and manifest test..

6. If a person who is here unlawfully has been granted leave on ECHR grounds, but is not permitted to work, and makes an ECAA application, the application should be considered on its merits in the UK, unless there is a very good reason not to do so. The reason why the grant of leave on ECHR grounds did not permit the applicant to work should be considered.

Clear and Manifest Test

7. This is a four point test to examine whether a person "clearly and manifestly" meets the substantive requirements of the ECAA, designed to inform decisions regarding proportionality. It is not a test which we expect can be met easily, as in order for the application to be "clear and manifest" there can be no room for doubt. Therefore, if there is any reasonable doubt or if any further examination, other than that allowed for under the "clear and manifest" test is necessary in order to assess whether the application meets the requirements of the Immigration Rules, the application should be refused.


8. Under the "clear and manifest test", applicants should only be granted admission when:
(i) from a brief perusal only
(ii) of the documents provided, together with any other information submitted,
(iii) it is readily apparent that there is
(iv) an established or potential viable business that meets the immigration criteria.

9. Where the applicant already has an established business in his country of origin which he wishes to transfer to the UK, the criteria for the decision under the clear and manifest test as to whether to grant leave to remain are based on paragraphs 217 (except 217(i)) to 219 of the Immigration Rules, and the factors set out in any relevant guidance on leave to remain cases submitted in the normal way should also be taken into consideration in these cases. Where the applicant does not have an established business but wishes to demonstrate the potential of a business, the criteria for the decision as to whether to grant leave to remain are based on paragraphs 211-214 of the Immigration Rules, and the factors set out in the section above on Entry Clearance applications should be taken into consideration in these cases also. However the way in which they are considered should reflect the fact that leave has been granted previously for a different category and, if there is any reasonable doubt regarding the overall credibility of the application, it should be refused.

10. In considering these cases, it will be particularly important for the applicant to provide a credible explanation of the origin of any funds in a UK bank account. The origin of any funds which are being provided by another party, and the question of whether they could credibly be considered to be "under his control" as required by paragraph 212 (ii) of the Immigration Rules, should be examined closely.

11. Although the clear and manifest test implies that an interview with the applicant is unlikely to be necessary, it may be helpful to carry out checks on information submitted (such as alleged customers) if it can be done readily and easily. Such checks should only be concerned with clarification of straightforward facts; if there is felt to be a need for any other checks, that would imply that there is a sufficient element of doubt for the application to be refused.

12. It should be noted that a failure to pass the clear and manifest test in-country does not mean that the same application might not pass when submitted at posts overseas, where local knowledge and expertise can be brought to bear on the assessment. The presumption should be that Entry Clearance for ECAA purposes should be obtained at post unless there are compelling reasons to allow switching and it would be disproportionate to require the applicant to return to his country of origin to obtain entry clearance.

Guidance on consideration of further and indefinite leave to remain cases in the ECAA category will be published later in the year, prior to the resumption of the service. In the meantime, an applicant may request a travel extension if they have an application for Further Leave to Remain or Indefinite Leave to Remain lodged with IND and the reason for travel is for urgent or compassionate reasons. On making this request the applicant will be required to produce evidence to support the need to travel and their travel arrangements, such as photocopies of tickets if these have been booked. Evidence for the reason to travel could consist of a doctor's note, including certified translation, if a relative is ill for example. If the travel reason is business related then some form of correspondence to corroborate this would be required. Once we have this evidence we can then make a decision regarding the travel extension.
 

ECAA FURTHER AND INDEFINITE LEAVE TO REMAIN APPLICATIONS

 

1. This guidance is for caseworkers considering applications from those who are in the UK under the provisions of an EC Association Agreement (ECAA) and are seeking Further Leave to Remain (FLR) or Indefinite Leave to Remain (ILR) under the same Agreement.

General
 

2. The requirements that the applicant must meet are set out in paragraphs 217-223 of the Immigration Rules. Paragraphs 220-221 relate to those who have spent less than four years continuously in the UK in the ECAA category and are applying for an extension of stay; paragraphs 222-223 relate to those who have spent four years continuously in this category and are seeking indefinite leave to remain.

3. In all cases, the onus is on the applicant to demonstrate that he meets the requirements under the Rules. The easiest way for him to do this is to provide all the information requested in the ECAA (Main) application form, and for the documentation to be provided wherever possible in a recognisable format that is easily verifiable by the caseworker.

Establishment of business
 

4. All applicants must meet the requirements of paragraph 217(ia-iv). In order to demonstrate that 217(ia) is met, we would expect to see supporting documentation. Possible evidence to demonstrate this will depend on the sector in which the applicant is operating, but might include:

Employers or Public Liability Insurance Certificate
copies of contracts awarded to or by the applicant
copy of the tax return (P35) for any staff that the applicant engages business rental documents for premises or equipment copies of invoices for work done or materials purchased. We would also expect to see sufficient testimony and verifiable references to support the claims made in the application about work that has been undertaken.

 

5. There may be some applicants for FLR or ILR who for whatever reason were granted initial leave to remain under the ECAA without a valid entry clearance in this category (as required by 217(i)). These applications should be considered using this guidance in the normal way (but see "History of Application" section below).

6. It is permissible for the applicant to be engaged in more than one business simultaneously.

Maintenance and accommodation
 

7. It is important for caseworkers to examine the particular circumstances of each individual case to establish to their satisfaction that 217(ii) is met. The income required for an applicant realistically to maintain and accommodate themselves and any dependants without recourse to employment or public funds should be assessed on a case by case basis, taking any relevant factors into account, and bearing in mind that income derived from sources other than businesses established in the UK under the terms of the Agreement should not be included. This includes anything earned by dependants of the primary applicant.

8. Applicants need not have generated the level of profit required to maintain and accommodate themselves solely from the business that forms the basis of their ECAA application throughout the first year of their stay, while the business was being set up (although they must be able to demonstrate how, in the absence of such profits, they have maintained themselves in that time), but the caseworker must be satisfied that such a level can be generated consistently in the future in order for further leave to be granted. For those seeking indefinite leave to remain, the applicant should provide evidence that such profits have been generated for the full three years following their initial 12 months leave.

9. Evidence of the level of income from the business should be demonstrated through the audited accounts required by paragraphs 218(vi), 219(v), and 222(iii) of the Rules, together with invoices and evidence of work undertaken that is in accordance with the original business plan and any other evidence submitted by the applicant. These accounts should also show expenditure on items crucial to the running of the business for the whole of the period in which it has been operative, such as essential equipment and travel costs. Evidence of personal expenditure should be provided through bank statements and documents relevant to significant expenditure such as tenancy agreements, utility bills, and Council Tax. "Audited accounts" in this context should be taken to mean accounts compiled by a fully qualified or chartered accountant. Checks should be undertaken where necessary to verify the professional status of these individuals.

Employment status
 

10. When considering whether an applicant has met the requirements of paragraphs 218 or 219, it is particularly important to consider whether the work on which the applicant has been engaged amounts to concealed employment. There is no statutory definition of self-employment, although previous decisions by the courts have established a number of criteria to distinguish between employment and self-employment. The kind of factors which need to be taken into account in deciding whether a particular engagement is one of employment or self-employment include:

• the degree of financial risk involved;
• the amount of control the worker has over what, when and how he / she does the work;
• the way in which pay is determined ? set fee or regular payment based on hourly/daily/weekly or monthly rates;
• whether the worker is required to work at the premises of the person worked for;
• whether the worker provides the services personally or has the right to send someone else in his/her place.

The common thread running through these indicators is that no single factor is conclusive; for each engagement the whole picture needs to be looked at in the light of all the facts.

 

11. The applicant, or the person who is engaging him, cannot simply choose that an engagement is one of self-employment. It will depend on the terms, conditions and facts of the relevant working engagement. The fact that someone has registered to pay tax and National Insurance contributions as a self-employed person with the Inland Revenue is not sufficient evidence that they are truly self employed as the system is one of self assessment.

12. If 'yes' can be answered to all of the following questions, it will usually mean they are not self-employed.

Will the person have to do the work themselves?

Can someone tell the person at any time what to do, where to carry out the work or when and how to do it?

Will the person work a set amount of hours?

Can someone move the person from task to task?

Will the person be paid by the hour, week, or month?

Can the person get overtime pay or bonus payment?

However any combination of some of these factors might also indicate employment.

 

13. If 'yes' can be answered to all of the following questions, it will usually mean they are self-employed.

Can the person hire someone to do the work for him/her or engage helpers at his/her own expense?

Will the person risk his/her own money?

Will the person provide the main items of equipment they need to do their job (not just small tools many employees provide for themselves)?

Will the person agree to do the job for a fixed price regardless of how long the job may take?

Will the person be able to decide what work to do, how and when to do the work and where to provide the services?

Can the person regularly work for a number of different people?

Will the national have to correct unsatisfactory work in their own time at their own expense?

Again, any combination of these factors might also indicate self-employment.

 

14. Broadly, someone is self-employed if they can demonstrate that they are in business on their own account and bear the responsibility for the success or failure of that business.

Consideration and verification procedures
 

15. Caseworkers should seek to verify key aspects of the application wherever practicable through the checking of references and documents, and confirmation of any relevant agreements and business activities. In some cases it may not be possible to establish, solely on the basis of the documents available to the caseworker, the true nature of the circumstances surrounding the application with sufficient confidence to allow an informed and reasonable judgement to be made. This may be due to doubts about the authenticity of documents, apparent inconsistencies in the evidence submitted, or significant omissions which seem unlikely merely to be a result of oversights in the preparation of the application. In these cases, consideration should be given to interviewing the applicant in person before making a decision in order to explore further the areas of doubt, and to contribute to the overall assessment of the application. There may also be cases where the application has been submitted by a third party and it would be helpful to test the credibility of the claims being made on their behalf through a face to face interview with the applicant. This may especially be so if a number of similar applications have been made by the same representative on behalf of different clients.

History of application
 

16. Although each application should be considered on the basis of current circumstances, the circumstances surrounding the original grant of entry clearance or further leave to remain for these applicants should be checked. If a caseworker feels that, for whatever reason, any particular aspect of the case was not examined sufficiently at the time of any previous decision, it would be appropriate for it to be looked at it in more detail now, if it was felt that such examination would help to inform the decision on the current application. Such checks may also help the caseworker to form a judgement regarding the overall credibility of the application.

17. In this context, previous immigration history may be taken into account, and may point towards further investigation and exploration of particular aspects of the application. But a "negative" history, including previous unlawful presence in the UK, cannot, in itself, be conclusive in refusing an application.

Length of extension of stay
 

18. Paragraph 220 of the Immigration Rules states that extensions of stay other than indefinite leave to remain should be for a period not exceeding three years. In unexceptional cases, further leave should be granted for three years. However there may be cases which do not merit refusal outright, but where there may be some doubt as to whether the applicant will be able to meet the requirements of the Rules for a full three year period. This may particularly be the case where the applicant has established himself during the initial 12 months leave, but there has been insufficient time since that point to generate enough evidence for the removal of such doubt. In these cases it may be appropriate to grant an extension of stay for less than three full years, and for the applicant to be required to apply again for a further extension at the end of that period of leave.

Forgery / falsification
 

19. Caseworkers should be aware of all current guidance regarding forgery and falsification of relevant documentation, and should take expert advice, whether locally or elsewhere, whenever there is doubt regarding a document submitted as evidence.

Sursa : IND