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Home Office publishes review into use of paragraph 322(5) for indefinite leave to remain refusals


Government defends majority of refusals as being correct, around 2% of cases accepted as being an error 

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The Home Office has today published its review into the use of paragraph 322(5) of the Immigration Rules to refuse applications for indefinite leave to remain (ILR) in the UK on the basis of "bad character" due to tax errors.

Image credit: UK GovernmentThe 20-page review can be read here.

For useful background on the issue of paragraph 322(5), see the article here by barrister Jo Wilding published in May.

In today's review, the Home Office defends its refusals as being correct in the vast majority of cases, but admits an error rate of around 2%. The review also reveals, however, that 244 people have so far successfully appealed against their refusals in the immigration tribunal. Almost 400 appeals still remain outstanding in the First-tier Tribunal.

The Home Office review says since January 2015, a total of 1,697 ILR applications from Tier 1 (General) migrants have been refused under paragraph 322(5). The Home Office says it is satisfied that the refusals were correct in the vast majority of cases as the 'minor tax errors' were considered to be attempts to misrepresent self-employed earnings for the purposes of obtaining leave or settlement in the UK.

Around 10% of cases (177 in total) were found to be more complex and less clear-cut, with a total of 56 cases identified by the review as requiring further action. A total of 37 cases (or 2% of all applicants) were accepted to have been refused in error, with 25 having since been granted leave to remain outside of the review and 12 having been given the benefit of any remaining doubt and therefore will have their refusals overturned. A further 19 cases require more information from either the applicant or HMRC before a final decision can be made.

The immigration minister Caroline Nokes said in a written statement to the Commons: "Aside from cases which have been allowed by the courts and tribunals, the review has identified 12 decisions which we intend to overturn, and a further 19 cases where we will seek more information from applicants before reconsidering their cases. The Home Office will contact each of the 31 individuals concerned to resolve their cases by the end of December. Errors of this kind are always regrettable, and I do not seek to minimise the impact that the error may have had on the individuals concerned. I will also ensure that the findings in this small minority of cases are used to inform our future decision making, to ensure that similar errors are not repeated."

The review sums up its key findings as follows :

  • Applicants have typically used self-employed income to "top up" their PAYE earnings in order to meet the minimum income threshold requirements to score enough points for Tier 1 (General).
  • There were large differences between the self-employed earnings shown by applicants' initial HMRC records and those claimed in the Tier 1 applications for the same periods.
  • In 88% of cases (1,490 applications), these differences amounted to more than £10,000. Of these, 73% of the applicants (1,084 cases) made amendments to their tax returns within the 6 months before a subsequent ILR application, or did not make any amendments (meaning the differences between their records remain).
  • In the majority of cases (83% where recorded), amendments were made more than three years after the date of the original tax return.
  • The pattern of behaviour in amending tax records was sufficiently unusual for HMRC to draw it to the Home Office's attention.
  • Applicants were given the opportunity to respond to our concerns. The primary response given by applicants, in 39% of cases (640 instances), was that the differences were the fault of their accountant.

On the subject of subsequent legal challenges to refusals, Caroline Nokes said the picture was mixed. The review states: "The review found that 65% of those appeals which have been heard so far in the First Tier Tribunal have been allowed, sometimes because of wider Human Rights considerations but also where a judge accepted appellants’ explanations (for example around the role of their accountant) that the Home Office had previously rejected. In other appeals with similar facts, the tribunals have rejected these explanations. In Judicial Reviews, the majority of applications for permission have been refused. Applicants have had their claims upheld in fewer than a third of the cases which have proceeded to a substantive Judicial Review hearing."

According to the review, almost 250 people have had their refusals overturned in court and almost 400 appeals remain outstanding.

The review states: "625 cases relating to decisions made between January 2015 and May 2018 have an appeal lodged against them. Of these cases, the First-tier Tribunal has substantively considered (allowed or dismissed) only 220 appeals, of which it has allowed 143 (65%) and dismissed 77 (35%). There are 372 appeals outstanding at the First-tier Tribunal."

Separate Judicial Review statistics suggest that applicants have been successful in 101 cases, and unsuccessful in 123 cases (a 45% success rate).

The Home Office says it expects the Court of Appeal will provide more clarity on many of the issues around the use of paragraph 322(5) early next year. The Home Office will consider the matter again in the light of this ruling.

"Until then, given the findings of the review, there are no plans to change the approach taken to deciding the majority of these cases. The review has, however, identified some areas for improvement, "the review states.

Immigration barrister Alex Burnett said on Twitter: "As suspected, the Home Office will continue to use 322(5) until told otherwise - hopefully by the Court of Appeal, early next year (in the 4 test cases)."

The Guardian reported: "Actual numbers of those wrongly affected are likely to be substantially higher: there are many hundreds of cases not covered by the review, which only considered cases between January 2015 and May 2018. In addition, the first-tier tribunal has 372 cases outstanding and another 242 cases that could be allowed, which suggests about a further 400 people could have been wrongly affected."