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Two successful judicial reviews in “paragraph 322(5)” tax cases


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Since January 2015, 1,700 settlement applications from Tier 1 (General) migrants have been refused under paragraph 322(5) of the Immigration Rules, primarily due to discrepancies between earnings declared to HMRC and to the Home Office at the time of making an application.

During that time, the higher courts in England and Wales have been busy deciding issues relating to the plausibility of explanations put forward by applicants and issues of fundamental fairness whilst the Court of Session in Scotland has remained silent – until now.

Dadzie [2018] CSOH 128 and Oji [2018] CSOH 127 are the first reported cases in the Court of Session on refusal of indefinite leave to remain under paragraph 322(5) because of tax discrepancies. The facts in both cases were very similar and the court heard them together. Ultimately both decisions were overturned because of flaws in how the allegations were put to the applicants and a failure to consider the innocent explanations put forward.

Significant tax discrepancies

In both cases, the applicants were refused settlement on the basis that there was a significant discrepancy between their self-employment declarations to HMRC and those submitted to the Home Office. The upshot, as is the norm with these types of cases, is that an applicant does not then qualify for that grant of indefinite leave to remain. The Home Office considered that the applicants had either misrepresented their earnings to HMRC to reduce their tax liability or had provided false information about earnings to UK Visas and Immigration in order to secure settlement.

In the Dadzie case, the discrepancy was about £12,500. Mr Dadzie blamed an oversight on his part for the discrepancy. Importantly, though, he had amended his tax records when submitting his most recent tax return, not at the time of applying for indefinite leave to remain (about six months later).

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In Oji, the discrepancy was far more – around £32,000 – but the redeeming factor was that the applicant had been called to an interview and assessed as credible. Crucially, Mr Oji was never actually challenged on the discrepancy of figures.

Both cases came before Lord Tyre (conveniently, one of Scotland’s leading tax judges!). His Lordship had little hesitation rejecting a bold argument that tax discrepancy cases could not fall under paragraph 322(5). Reviewing a long line of authority from the courts and tribunals in England, Lord Tyre concluded that it was clear that the conduct in question quite clearly could fall into the wording of paragraph 322(5). As the relevant guidance made clear:

A person does not need to have been convicted of a criminal offence for this provision to apply. When deciding whether to refuse under this category, the key thing to consider is if there is reliable evidence to support a decision that the person’s behaviour calls into question their character and/or conduct and/or their associations to the extent that it is undesirable to allow them to enter or remain in the UK.

In so concluding, Lord Tyre emphatically rejected a contrary view of the Upper Tribunal in Kadian v Secretary of State for the Home Department (unreported, HU/11723/2016). The court also endorsed the reported tribunal case of Khan which laid out a number of sensible and logical considerations to which the Secretary of State should have regard before labelling an applicant as deceptive in these types of cases.

Refusals found unreasonable

What was ultimately fatal to the Secretary of State’s decisions in both cases were that:

  1. No consideration had been given to the explanations posed by either applicant and whether it was conceivable that the discrepancies could be the result of a genuine mistake rather than deception;
  2. The decisions failed to take into account that Mr Dadzie had amended his tax return well before his application and that Mr Oji has been assessed as credible at an interview.
  3. The issues of the discrepancy had not directly been put to the applicants.

All of this uncertainty proved too much and Lord Tyre found the decisions were unreasonable according to Wednesbury principles.

The case is a good one for a consolidation of the case law on this difficult area. In particular, arguments that tax discrepancy cases cannot fall under paragraph 322(5) are very likely to be rejected. That said, Lord Tyre has left things on a positive note in that there does need to be very careful consideration of the factual matrix of the case by the Secretary of State before an application can be refused on these grounds.

Judicial review in Scotland

It’s surprising that it has taken so long for a case to reach this level in Scotland. The Scottish courts have seldom been unable to keep up with the speed at which the law develops, adapts and is applied in courts in England and Wales. From my own experience, this is for two main reasons.

Firstly, the Office of the Advocate General (the UK government’s Scottish legal team) is quite good at sorting the wheat from the chaff and appropriately concedes cases — resulting in fewer cases reaching the hearing stage.

On the downside, the administrative procedure for lodging and progressing judicial review in Scotland is onerous, tedious and, frankly, archaic.

It is common for decisions on permission to take months rather than weeks and availability for hearings are limited because the same judges are sitting in commercial, family, personal injury etc cases. This is because judicial reviews in Scotland can only be heard in the Court of Session.

Funnily enough, as I was writing this, a colleague in an English firm posted on LinkedIn that he had issued a claim for judicial review at 3:45pm and the Upper Tribunal had issued an injunction at 4:30pm! Practitioners in Scotland can only dream of that sort of turnaround.

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Bilaal Shabbir

Bilaal is an Advocate at the Scottish Bar and practises in both Scotland and Jersey, focusing on public law, commercial dispute resolution and offshore trust litigation. He is a Panel Member on the Football Association’s (FA) National Serious Case Panel.