News Analysis: MAC report on Intra-company transfers

What was the MAC asked to look into, and why?

In September 2020 the Home Secretary commissioned the Migration Advisory Committee (MAC) to report on the Intra-Company Transfer (ICT) visa route. The MAC was asked to review ICT to ensure it complies with the UK's commitments under free trade agreements, to assess the ICT eligibility criteria and to comment on the design of future routes to enable overseas businesses to send a team of workers to the UK to set up a UK subsidiary.

The underlying question is whether ICT is now a redundant route, after the relaxation of the Skilled Worker (previously Tier 2 General) rules in December 2020. After the removal of each of the Resident Labour Market Test (RLMT), the cap/quota on visa approvals and the relevant cooling off period, together with a lowering of the minimum salary and skill level for Skilled Workers compared to ICT, what changes are needed to reform the ICT route?

The MAC consulted with interested parties and published a report on 13 October 2021.

What did the MAC say about the impact of ICT?

The ICT route for senior managers or specialists, including commitments for graduate visas, is required by the UK's membership of the World Trade Organisation's General Agreement on Trade in Service (GATS) and other free trade agreements.

The MAC reported that there is no evidence that ICT workers are having an adverse impact on wages or employment amongst domestic workers, even in those sectors such as technology where the use of ICT is more prominent. They found that in most cases, given the higher salary thresholds in place, ICT workers will be net contributors to the UK's public finances.

What were the key ICT recommendations?

The headline recommendation was that time spent in the ICT route should lead to settlement, including if the worker switches from ICT to another visa route. This would be a big change, because ICT workers have not been eligible for settlement for the past 10 years or so. The MAC highlighted that ICT applicants that move to the UK broadly pay the same fees and taxes as Skilled Workers. Workers often do not know their settlement intentions when they first arrive, or their plans change over time. Some businesses consulted were concerned about losing their significant sponsorship investment if workers switch from ICT to Skilled Worker to get on the path to settlement, so MAC believes giving settlement rights to ICT applicants will reduce that incentive. 

The MAC concluded that most of the other elements of ICT should remain unchanged, including the higher skill level (retain RQF6+), the English language exemption and visa eligibility rules. Other recommendations:

• salary – increase threshold from £41,500 to £42,400 (or the going rate for the role if higher) but drop it to £20,480 (or the going rate with a 30% reduction for new entrants if higher) for graduate trainees, to ensure consistency with Skilled Worker. And update thresholds annually
• allowances – unlike in Skilled Worker, some guaranteed allowances can count toward the ICT salary. The MAC has insufficient data, but it recommended increased monitoring and enforcement to determine whether there is abuse of the rules, for example in cases where an employer provides workers with accommodation
• immigration Skills Charge – unchanged, but in its Trade and Co-operation Agreement with the EU, the UK has committed to exempt EU ICT workers from the scope of ISC by 1 January 2023. As this will save larger sponsors up to £5,000 for a five-year visa, employers will hope that this is extended to non-EU nationals too. 

What about the recommendations on inward investment – setting up subsidiaries?

Currently only one employee of an overseas business can get a visa to set up and run a UK subsidiary or branch, using the Representative of an Overseas Business (sole representative) visa. This visa works well as far as it goes – and approvals have risen steadily from 370 in 2016 to 934 in 2019 – but it has limitations. Some international business committing to UK expansion want to send more than one non-British employee to launch the UK operation, but in many cases there will be a hiring gap of up to six months before colleagues can join the sole rep, because the new UK entity has to first apply to become a sponsor which is a slow process for a start-up company. 

In its UK Innovation Strategy published in 2019, the UK proposed a Global Business Mobility visa route from 2022 to help overseas companies to transfer workers to the UK to establish and expand a UK business. The MAC's recommended approach is to:

• keep the sole representative route but reduce the visa period to two years, and remove ability to extend (switching into other routes would be permitted)
• introduce a two-year trial of a 'Team Subsidiary' route for up to five applicants, with (presumably) the overseas business acting as sponsor. At least one of the team would need to meet the current sole representative requirements, with the rest meeting Skilled Worker eligibility. That would allow one senior executive and up to four colleagues (whose UK roles could be a lower skill level) to arrive at the same time to launch the UK business. If implemented, this would be a hugely welcome addition to increase the UK's competitiveness in attracting foreign investment for business expansion and projects.

Where does this leave ICT?

We will need to wait for the Home Office's reaction to the MAC's proposals. It's clear that the liberalisation of the Skilled Worker rules – especially removal of the RLMT – has pushed many sponsored workers towards that route. And if a new Team Subsidiary route or similar is introduced for businesses setting up in the UK, that will also reduce the need for ICT.

ICT remains a good option for highly skilled workers, especially for temporary assignments from international group offices where the compensation package has a significant allowance component, where workers will be based in multiple countries, or where there is a need to avoid the delay or process involved with proving English language. Offering settlement rights to ICT applicants will incentivise more workers to apply for and remain in ICT, but in reality the relative ease of use coupled with the lower skill and salary level will continue to make Skilled Worker the primary choice for employers. Sponsors remain concerned about the high costs of sponsorship, so if some or all ICT applicants are exempt from the ISC by the end of next year, that cost saving may well make ICT much more attractive again.