Procedural Fairness, Inconsistent Decision-Making and the Importance of Akturk and Karagul
Introduction
Having practised immigration law for approximately 18 years, much of that time representing Turkish businesspersons under the Ankara Agreement (ECAA), I have seen considerable changes in the way the Home Office deals with these applications. Some changes have been understandable, particularly as the Immigration Rules and relevant guidance have developed. Others, however, have caused me increasing concern. In recent ECAA settlement applications, I have encountered refusals where the Home Office has questioned whether an applicant was genuinely operating a business, not necessarily because there was evidence that the business did not exist, but because the caseworker was dissatisfied with the way invoices were prepared, cash payments were handled or financial records were presented. What concerns me most is that some of these applicants have been running their businesses for years. They have submitted accounts, tax returns, invoices and other supporting documents in previous applications and have been granted extensions of leave by the same Secretary of State. Yet when they apply for indefinite leave to remain, practices which were previously accepted are suddenly treated as reasons to question the genuineness of their businesses. In my view, this raises serious questions about the fairness and consistency of Home Office decision-making.
Does the Format of an Invoice Determine Whether a Business Is Genuine?
Under paragraph ECAA 4.2 of Appendix ECAA Settlement, an applicant must satisfy the Secretary of State, on the balance of probabilities, that they have genuinely established or operated a business in the United Kingdom and meet the other applicable requirements, including those relating to viability and continuing business activity. There is no dispute that the Home Office is entitled to examine the evidence and satisfy itself that the business is genuine. However, there is an important distinction between a business that is not genuine and a genuine business whose owner does not maintain records in the particular manner a caseworker might prefer. "So, the question is do business owners need guidance from caseworkers as to how they operate their businesses and if they fail to operate a business in a certain manner does that make them not genuine businesspersons".
Consider a self-employed painter and decorator who has been trading for several years. He carries out work for customers, receives payment, purchases materials, declares his income and submits annual accounts. His invoices may be basic. They may not resemble those issued by a larger company with sophisticated accounting software. But does that mean he has not genuinely been in business? Of course, where invoices fail to comply with applicable legal requirements, or contain material inconsistencies, the Home Office may legitimately ask questions. But an imperfect invoice is not necessarily a false invoice.
In my experience, too much emphasis can sometimes be placed on the appearance of documentation rather than the underlying business activity. The proper question should be whether the individual has genuinely operated the business, assessed against the evidence as a whole. If there are concerns about an invoice, why not consider the other available evidence, including bank statements, supplier invoices, customer correspondence, tax returns and accounts? An applicant should not be treated as dishonest simply because their method of record-keeping does not meet a caseworker's preferred standard.
Website & social media
Another concerning issue arising in recent ECAA settlement refusals is the Home Office questioning the genuineness of a business because it has no website, social media presence or advertising. But is a business required to advertise to be considered genuine? Does the absence of a website or social media account mean that an individual is not genuinely trading? Many small businesses operate successfully through word of mouth, repeat customers and personal recommendations, without any need for advertising. Surely, what matters is whether the individual is genuinely carrying on business, providing services and generating income, rather than how they choose to promote their business. It is particularly unfair where the Home Office has accepted the same business in previous applications, only to raise the absence of advertising as a concern at the settlement stage, without any material change in circumstances.
Cash Payments and Bank Deposits
Another issue I have encountered concerns cash income. Many small businesses continue to operate partly in cash. This is particularly common among barbers, cleaners, painters, decorators and other self-employed tradespeople.
Take a barber who receives numerous cash payments during the day. It would be unrealistic to expect a separate bank deposit for every haircut. Likewise, a self-employed tradesperson may receive cash from customers and use some of that money to meet legitimate business expenses, provided those transactions are properly recorded and accounted for. The absence of a corresponding bank deposit for every payment does not automatically mean that the income was never received. What matters is whether the business income has been properly accounted for, whether the relevant tax obligations have been met and whether the evidence supports the claimed business activity.
I am not suggesting that cash income should escape scrutiny. Far from it. Applicants must be able to explain their financial affairs and provide credible evidence of their business activities. However, there is a difference between identifying an unexplained financial discrepancy and concluding that a business is not genuine simply because not every cash payment appears as an individual bank deposit. That distinction should not be overlooked.
Why Is Evidence Previously Accepted by the Home Office Now Being Rejected?
For me, this is perhaps the most troubling aspect of some recent ECAA settlement refusals. I have represented Turkish businesspersons who have operated their businesses over a number of years and obtained successive extensions of leave. During those applications, they provided financial records, invoices and accounts prepared in substantially the same manner. The Home Office considered those applications and granted further leave. When the same individual subsequently applies for settlement, however, a different caseworker may take issue with the very same accounting practices. This raises an obvious question: what has changed?
Has the Home Office discovered new evidence? Has it identified a genuine discrepancy which was previously overlooked? Or has the current caseworker simply adopted a different approach to assessing the documents? I fully accept that the grant of an earlier extension does not automatically entitle an applicant to indefinite leave to remain. Each application must be considered under the relevant Immigration Rules. Equally, an earlier decision does not prevent the Secretary of State from identifying an error or questioning evidence which was previously accepted. Nevertheless, where an individual has relied on substantially the same business practices over several years, and those practices have previously been accepted, I consider it reasonable to expect a clear explanation for any materially different conclusion. It is particularly concerning where a refusal effectively calls into question the genuineness of business activities extending back over several years. Applicants are entitled to expect consistency in administrative decision-making, even though consistency does not mean that every application must succeed.
Procedural Fairness: The Importance of Akturk
The question of procedural fairness is not new in ECAA litigation. Stuart & Co Solicitors acted for the claimant in R (Akturk) v Secretary of State for the Home Department [2017] EWHC 297 (Admin). That case arose under the earlier ECAA framework and concerned the assessment of a proposed business, the applicable guidance and the fairness of the decision-making process. Although the circumstances were different from those arising in present-day settlement applications, the wider importance of fair and rational decision-making remains relevant. Where the Home Office has concerns about the evidence, it is necessary to distinguish between an applicant who has failed to establish that the Immigration Rules are satisfied and an applicant whose honesty or credibility is being challenged.
These are not necessarily the same thing. If a caseworker believes that invoices are fabricated, that business transactions never occurred or that an applicant has deliberately misrepresented their business activities, those are serious allegations. In appropriate circumstances, fairness may require that the applicant is given an opportunity to address those concerns before an adverse decision is reached. It should not be assumed that every evidential shortcoming amounts to dishonesty.
Karagul and Allegations of Bad Faith
Another important judgment is R (Karagul and Others) v Secretary of State for the Home Department [2019] EWHC 3208 (Admin), in which Stuart & Co Solicitors also acted for the claimants. The case addressed procedural fairness in the context of ECAA applications and the distinction between an ordinary assessment of an application and adverse findings which, in substance, concern an applicant's honesty or intentions.
This distinction is particularly important when considering refusals based on allegedly unreliable business documents. A caseworker may be entitled to conclude that the evidence submitted is insufficient to establish the relevant requirements. However, it is quite another matter to suggest that an applicant has fabricated invoices, invented business transactions or falsely claimed to have operated a business. Such findings can have consequences extending beyond the immediate application. The principles considered in Karagul demonstrate why the nature of an adverse finding matters when determining what procedural fairness requires.
This does not mean that the Home Office must interview every applicant or issue a warning before every refusal. It does mean that where serious allegations are being made, the decision-making process must be fair in the circumstances of the particular case.
A Genuine Business Does Not Have to Be a Perfectly Administered Business
After many years of representing Turkish businesspersons, one thing is clear to me: small businesses do not all operate in the same way. A self-employed cleaner does not necessarily maintain the same accounting system as a large company. A painter and decorator may use simple invoices. A barber may receive numerous cash payments without depositing each payment separately.
These are ordinary features of many small businesses. Of course, business owners must maintain appropriate records, comply with their tax obligations and demonstrate that they satisfy the Immigration Rules. But the Home Office must also recognise the practical realities of running a small business. The genuineness of a business should be determined by considering the evidence as a whole, rather than treating one perceived administrative deficiency as conclusive.
Conclusion
Having worked with Turkish businesspersons for approximately 18 years, I find the apparent change in approach to some ECAA settlement applications particularly concerning. I do not question the Home Office's right to investigate business activities, examine financial records or refuse applications where the requirements are not met. My concern is with the way those powers are sometimes exercised. Where an individual has genuinely operated a business for several years, paid taxes, maintained accounts and obtained successive grants of leave, it is difficult to see how a different view of the format of invoices or the handling of cash payments should, without more, justify a finding that the business was never genuine. Where the Home Office intends to depart from its previous assessment of materially similar evidence, there should be a reasoned explanation. And where the proposed refusal involves allegations of dishonesty or fabricated business activity, proper consideration must be given to procedural fairness and the applicant's opportunity to respond.
The principles considered in Akturk and Karagul remain important reminders that immigration decision-making must be fair as well as lawful.
Ultimately, the question is a simple one: is the Home Office assessing whether an applicant genuinely operated a business, or whether the applicant maintained their records and conducted their business in the particular way a caseworker now expects?
Perhaps it is also time to ask what practical experience caseworkers have in running a business themselves, and whether they fully appreciate the realities and challenges faced by small business owners. Running a business is not a one-size-fits-all exercise. Different businesses operate in different ways, and the absence of a particular form of record-keeping, advertising or banking practice should not automatically cast doubt on the genuineness of a business.
In my view, decisions should be based on the evidence of genuine business activity and the applicable Immigration Rules, rather than a caseworker's personal expectations of how a business ought to be run.