New Home Office Guidance on Refusing ILR for Tax Discrepancies

On 16^th January 2020, the Home Office issued new guidance for UK Visas and Immigration caseworkers assessing Tier 1 (General) ILR applications, entitled 'False representation: Tier 1 (General) earnings conerns'. The new information is intended to be used with the existing fasle representation guidance, which was released in Autumn 2019.

Section 322 (5) of the Immigration Rules

Section 322 (5) of the Immigration Rules (part 9: grounds for refusal) outlines grounds for the rejection of leave to remain or variation of leave to enter or remain in the UK. It states, "the undesirability of permitting the person concerned to remain in the United Kingdom in the light of his conduct (including convictions which do not fall within paragraph 322(1C), character or associations or the fact that he represents a threat to national security". As of November 2018, according to (then) Minister for Immigration, Caroline Noakes, nearly 1,700 applications had been refused on the basis of section 322(5). Of these, 1,490 had discrepancies between earnings declared to the Home Office and those on HMRC records.

The case of Balajigari v Secretary of State for the Home Department [2019] EWCA Civ 673 in April 2019 was significant in that it challenged a number of refusals by the Home Office on the basis of Section 322 (5) earnings discrepancies. It was concluded by the Court of Appeal that "the approach taken by the Secretary of State in deciding to refuse the applications for leave to remain in each of these cases on paragraph 322 (5) grounds - which we take to have been his general approach in all earnings discrepancy cases - was legally flawed". They reached this conclusion because the Home Office had proceeded immediately from the discovery of discrepancies to a decision that dishonesty had occurred. As such, the applicants had not been given an opportunity to provide an innocent reason for the discrepancy.

As a result of this ruling by the Court of Appeal, the Home Office published the October guidance, which some senior immigration law commentators considered to be an overly narrow interpretation of the conclusion reached. The October guidance introduced a new "Minded to Refuse notification" (MTR) procedure (i.e. notification that the application may be refused on the grounds of false representation). On face value this was a positive move as it allows the applicant to explain the reason for any financial discrepancy. However, the guidance imposes conditions on this new notification, including that "The applicant may not necessarily know about the information you have considered or its significance, for example information obtained directly from another Government Department".

What is the purpose of the revised guidance?

The new guidance expands on the use of MTR letters, and the considerations which must be made before one is issued. The broad process outlined is as follows:

1. Initial consideration against all relevant factors
2. Send MTR letter
3. Consider response against all relevant factors
4. Final decision

In some cases, Home Office officials have provided questionnaires to clarify earnings and tax returns (as opposed to formal MTR letters), but the new guidance clarifies that these cannot be used in lieu of MTR letters. In such circumstances, MTR letters will need to be sent in accordance with the process above.

According to the guidance, some of the factors which should be taken into account by case officers when considering applications include:

• The extent of the discrepancy
• Whether any difference between the amount declared and the formal tax recorded would have altered the points awarded when applying for settlement
• Look for factors which indicate dishonesty including timing (i.e. dishonesty may be more likely if the declaration made to the Home Office was made around the same time a lower amount was reported to the Inland Revenue)
• Whether there are any signs an error was made by the applicant's accountant
• Whether there are any other mitigating factors which may explain the discrepancy
• If there were any overseas earnings, could exchange rate variation explain the difference?

If there is reason to conclude that discrepancy occurred as a result of an innocent mistake, the new guidance states the case can be granted immediately.

It is also made clear that the Case Officer must provide unambiguous reasoning for their concerns within the MTR; "you must explain your concerns unambiguously to the applicant, to ensure they understand them and have a fair chance to respond".

Responses to MTR letters from applicants must show that 'on the balance of probability' any concerns raised have been addressed with "full, particularised and convincing explanation, and evidence where possible". As such, assertions made by the applicant will be disregarded. The guidance also makes it very clear that if there is any evidence that the response made appears to be a 'stock answer', or that it doesn't seem to have been written specifically for the application in hand, there will be strong grounds for refusal.

If any element of clarification requested in the MTR is not provided by the applicant, no further clarification needs to be sought in writing by the Case Officer; "If something is missing, you should check whether the applicant has responded to all the questions in the MTR letter and can have reasonably been expected to have provided it. You do not need to write out again for anything further providing the MTR letter was clear".

Final words

While it is positive that Tier 1 (General) settlement applicants will have a right to provide an explanation if there is a discrepancy between the income declared in their application and the income stated on their tax return, there remains a strong element of uncertainty that the application will be granted even if an MTR is issued. Even if the applicant is entirely innocent of any wrongdoing, if the Case Officer is not entirely convinced by the answer/s given, or something is missing, the application may be refused. As ever, it pays to be extremely diligent in your original application, and if problems do arise, seek the advice of an experienced immigration lawyer l who can help you navigate the increasingly complex rules and guidance being issued by the Home Office