The first phase of a Home Office investigation into migrants being refused settlement because of tax discrepancies shows that the refusals were “correct”, the immigration minister said today.

In a letter to the Home Affairs committee, published on 28 June, Caroline Nokes laid out the initial findings from a review of several hundred “paragraph 322(5) cases”, so called after the relevant Immigration Rule. The letter says that the hundreds of cases reviewed so far “fall into a clear pattern” where applicants “exaggerated their earnings to the Home Office to claim enough points to obtain leave to remain or indefinite leave to remain in the UK or, alternatively, substantially under-reported their earnings to HMRC to evade tax”.

Campaigners have accused the department of systematically refusing applications on the basis of minor, easily explicable differences between how freelance earnings were declared for immigration and tax purposes.

Nokes now says that the cases reviewed show that the tax discrepancies used to justify refusal were significant:

In 249 of the initial 281 cases reviewed, applicants amended their HMRC records by more than £10,000. In many of the remaining cases, though the differences were less than £10,000, they were nevertheless substantial.

In 241 cases, the amendments were made more than three years after the initial submission to HMRC, with the majority looking to amend their records within one year of making a further application to the Home Office.

Such amendments appear to have been made only for the years for which points were claimed in previous Tier 2 applications, not for the intervening years.

Applicants were given the chance to explain their situation. Most of those who did provided no further explanation other than that there were errors by their accountants.

Paragraph 322(5) says that an application for leave to remain should normally be refused based on

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.

The letter also reiterates Sajid Javid’s promise that outstanding paragraph 322(5) decisions are on hold pending the outcome of the review. Addressing reports that some refusals are still being issued, Nokes says that “these have in fact been legal challenges to refusal decisions which have already been made, in some cases 2-3 years ago”.

In the second phase, the review will look at a further 1,671 cases. It is expected to be completed in the next few weeks.