Ministers are tightening up the "entrepreneur" visa scheme after checks uncovered a new scam involving potentially thousands of bogus applications.
The Home Office disclosed the number of foreigners applying for the right to stay in this country under the entrepreneur scheme rocketed from 118 in 2009 to just under 10,000 last year.
It was unclear when ministers were alerted to the rapid rise in numbers, but a Home Office spokesman confirmed two thirds of the applicants – more than 3,000 people – were granted a visa.
The Government believes organised crime gangs have been involved in the scam.
It is understood gangs would charge applicants to temporarily lend the £50,000 required to demonstrate they had the capital to invest in business schemes.
The surge in entrepreneur visa applications coincided with ministers' decision to close another visa route – for "post study work" by students who had completed their courses – in 2012.
Applicants denied access to those visas are now believed by the Government to have fraudulently switched to the entrepreneur route.
Immigration officials uncovered the scam after comparing their files with tax records which showed many of the so-called "entrepreneurs" had been working full-time for employers after obtaining their visas, sometimes in low-skilled jobs.
Under the terms of an entrepreneur visa, the holder is only allowed to work for their own business and not take employed work elsewhere.
James Brokenshire, the immigration minister, said: “This government is building an immigration system that is fair to British citizens and legitimate migrants and tough on those who abuse the system and flout the law.
“Our reforms have cut net non-EU migration to levels not seen since the 1990s and slashed overall net migration by a third since its peak under the last government. “And we will not hesitate to take firm action to protect our immigration system further – particularly when there is evidence of criminals targeting what they think are weaknesses in the rules.”
Applicants will now have produce more evidence of their business activities to secure an entrepreneur visa and other restrictions will be placed on switching to the visa from other immigration routes, the spokesman said.
Wide-ranging allegations about student visa fraud were made in a BBC Panorama documentary broadcast in February.
Thanks to David Barrett.
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