ChinaEditor's PicksReasonable Doubt

8 Questions Hongkongers Must Ask Before Taking Up The UK’s BN(O) Visa Offer

Reasonable Doubt
With David Lesperance

A contrarian expert on contingency plans for the wealthy delivers uncomfortable truths.

It has now been just over 4 weeks since the UK government announced a program for British Overseas Nationals, and there has been enough time to see the details of the program and the Chinese government’s reaction.

Therefore, it is time to take a clear-eyed analysis of the BN(O) offer and provide some thoughts as to which groups should take advantage of this program and which groups should avoid it.

Other former colonies got a better deal than Hong Kong
The announced BN(O) program contrasts starkly with that offered to the holders of British Overseas Territories citizens (BOTCs), such as those of Bermuda, Cayman Islands, British Virgin Islands, Turks & Caicos, Anguilla, and Monserrat in 2002. 

In the BOTC case, the UK was attempting to have those BOTs that were financial centres adopt UK anti-money laundering standards. Such AML standards were under the jurisdiction of local BOT jurisdictions so the UK entered into a quid pro quo arrangement. The deal ultimately struck ensured that BOT citizens (“BOTC”) would be entitled to full UK citizenship, including the right of abode and the EU mobility rights that the UK enjoyed before Brexit. 

A key point is that, unlike the situation in 1997 when the UK handed over Hong Kong, there was approximately only a quarter of a million total BOTCs, spread amongst a multitude of jurisdictions. While there might be the occasional BOTC who would move to the UK, there was not a concern about a massive relocation from Hamilton Bermuda to Manchester.

Both in 1997 and again in 2020, there was and is a much larger number of HK BN(O)s – estimated at well over three million – than there was of BOTCs, and an expectation of a large number of them moving from Hong Kong to the UK. Adding to the mix is the Brexit-voting UK population and exploding unemployment and economic turmoil as a result of COVID-related lockdowns. The net result is that the offer given to BN(O)s is substantially less generous than that given to BOTCs 18 years before.

Instead of instant full UK citizenship, the BN(O)s are being offered residence only. Furthermore, there are substantial physical presence requirements to convert this residence status to the UK equivalent of permanent residence (Indefinite Leave to Remain, or ILR) after five years. 

A message from our partners
June 3rd ad version

Under the British Nationality Act, an applicant for UK citizenship needs to have at least five years of Leave to Remain and at least one year of Indefinite Leave to Remain. This means, in practice, that a BN(O) who takes up the UK offer will be eligible to apply for UK citizenship only after six years (assuming they have met the physical presence requirements). Naturalization applications are taking, on average, 6 months (but could be longer). Therefore, a BN(O) who takes up the UK offer must expect to wait six and a half years to obtain the status that BOTCs obtained immediately.

How many bridges are you willing to burn?
China’s reaction to the UK’s move was swift and predictable. Anyone found to have taken up the BN(O) offer will be denied future entry to Mainland China and even to Hong Kong. This reflects the Chinese government’s position that the BN(O) offer is deliberately provocative and inappropriate.

So what’s a BN(O) to do? The right course of action will depend on their answer to the following eight questions:

  1. Do you have the ability to secure any alternative residence or citizenship other than the BN(O)?
  2. Do you have the ability to finance the requirements placed on a BN(O) in the UK?
  3. How do you view your future financial prospects in HKSAR vs. the UK?
  4. Are you concerned about the impact of the Security Law given your actions in the past year?
  5. Would being denied future entry into Mainland China or the HKSAR constitute a personal or business hardship?
  6. Do you have property and business in HKSAR and/or Mainland China?
  7. Are your HKSAR banking relationships dependent upon being seen to support the Chinese/HKSAR governments?
  8. Are you looking to immediately relocate from HKSAR or are you looking for an insurance policy, “just in case”?

For those young people who actively took part in the demonstrations and who feel that they do not have an economic or personal future in Hong Kong anyway, the BN(O) visa may be a welcome lifeline.

For business people, the “free” BN(O) offer may be too expensive when they add in the hidden cost of physical presence, UK taxation, UK divorce courts (Remember: Tax is a percentage of income; divorce is a percentage of capital!,) and loss of future access to Hong Kong and China may be much too high. Especially in an environment where the Chinese government is beginning to selectively enforce dual citizenship and overseas taxation rules.

The honest answer to the above questions and the expert advice of qualified, independent immigration and tax advisors could help High Net Worth families avoid the high cost of taking up the UK’s free offer. Time to tread carefully and chose wisely.

David Lesperance AuthorSubscriberParticipant

David Lesperance is a global leader of international tax and immigration advisors.

A published author in the field, his personal interest in these areas of law grew from his experience working as Canadian immigration and customs officer while studying law. Since being called to the bar in 1990, he has established his expertise with major law firms, his own law firm and as a private consultant. David has successfully advised scores of high and ultra high net-worth individuals and their families, many of whom continue to seek his counsel today. In addition he has provided pro bono advice to many governments on how to improve their Citizenship by Investment, Residence by Investment or Golden Visa type programs to better meet the needs of his global clients. David is supported by a team of professionals, some of whom have worked with him since the early 1990s.

follow me