The Home Office has published specific guidance on settlement applications by migrants who previously held Tier 1 (General) leave and who declared different sets of earnings to the Home Office and HMRC. The document must be read alongside the more general guidance published in October, which covers the refusal of applications where the person has made a false representation.

Background

Since January 2015, the Home Office has refused around 1,700 settlement applications by people who declared a different income in their immigration applications as opposed to their tax returns, relying on paragraph 322(5) of the Immigration Rules. Paragraph 322(5) states that an application for leave to remain should be refused where

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.

These refusals were challenged in the Court of Appeal case of Balajigari v Secretary of State for the Home Department [2019] EWCA Civ 673. The court ruled that the Home Office was wrong in not giving an opportunity to the applicants to respond to an allegation of deception or dishonesty. In response, the Home Office published general guidance on situations where the applicant is accused of deception or dishonesty, taking an arguably too narrow approach.

The department has now published this further guidance specifically dealing with Tier 1 (General) settlement cases where it has concerns over the earnings declared by the applicant.

Underlying principles of the guidance

Caseworkers are to use the guidance in all applications where there were earning discrepancies, even if declared in previous applications. It is relevant not only to people who over-declared their earnings in immigration applications, but also those who under-declared their earnings to HMRC (presumably to reduce their tax liability).

The guidance goes on to summarise some of the relevant findings in Balajigari, including that:

• Submission of false earnings is enough to engage the use of paragraph 322(5) of the Immigration Rules (some have argued that the rule could only be used in cases of national security)
• The Home Office does not need to make enquiries with HMRC nor to follow HMRC’s position (for example where HMRC did not impose a tax penalty on the person)
• The Home Office will not usually accept a “mere assertion” from an applicant or their accountant that the discrepancy was a simple mistake without a full explanation of what the mistake was and how it arose
• There may be cases where, even if the applicant was dishonest in their declaration of income, they should be granted leave, for example because it is in the best interests of children involved

Minded to Refuse letters and procedure

The main finding of Balajigari was that the Home Office must allow applicants the opportunity to respond to a finding of dishonesty, and specifically to explain why there were discrepancies in their earning declarations if they are alleged to be dodgy. The department accordingly introduced “Minded to Refuse” (MTR) letters. These are used to inform the applicant of its intention to refuse the application and to ask for an explanation.

The guidance confirms that the questionnaires which some applicants received in the past asking about their earnings and tax returns do not amount to an MTR letter. Where these do not provide sufficient explanation as to the earning discrepancies, an MTR letter should be sent before refusing the application.

The guidance goes on to list a non-exhaustive list of factors caseworkers should consider before sending the MTR letter, including:

• The size of the discrepancy, and whether it made a difference to the points an applicant would have earned towards settlement and/or to their tax liability
• The timing of the discrepancy and any amendments to earnings declared to HMRC. When a higher income was declared to the Home Office at around the same time as a lower amount being declared to HMRC, this would indicate dishonesty. Similarly, amending tax declarations long after the submission of the tax return, but shortly before an application to the Home Office, would also indicate dishonesty
• The nature of the employment, including whether the applicant was in employment or self-employment, and whether any earnings were genuine or not
• Whether the discrepancy can be explained by the fact that applicant had overseas earnings, dividend income or business expenses
• Whether there is a plausible explanation that it was an accountant’s mistake
• Whether there were any mitigating factors which would explain an applicant not realising the discrepancy, for example ill-health

If not satisfied that there is a genuine explanation for the discrepancy, caseworkers should send MTR letters which should “explain [their] concerns unambiguously to the applicant, to ensure they understand them and have a fair chance to respond”.

In the same way that as caseworkers are expected to send particularised and specific MTR letters, applicants are expected to respond with particularised and evidenced explanations. The guidance tells caseworkers that they “should not simply accept assertions from applicants. Their responses should be backed up with a full, particularised and convincing explanation, and evidence where possible”.

Applicants should be particularly careful not to send what the Home Office calls “a stock response (for example, the wording has been copied, there is a lack of specific detail, or details do not match the applicant’s case)”, which the Home Office is likely to review negatively. On the other hand, applicants who provide a seemingly sound explanation, but where the Home Office may still not be satisfied it is “genuinely specific to their case”, may be invited to attend an interview.

What does it mean?

All in all, it is clear from the guidance that the Home Office will be taking a restrictive approach to applicants with tax discrepancies. Although anyone applying from within the UK is likely to be given an opportunity to explain themselves, the Home Office may still go on to refuse their application unless it receives a sound, tailored and well-evidenced explanation which goes beyond asserting a mistake by the applicant or their accountant.

As I suggested in this previous post, I would advise applicants to try making human rights applications wherever possible, in an effort to attract a right of appeal.