Discrepancy in declared earnings. Paragraph 322(5)
In 2010 a recent graduate applied for permission to remain under the Tier One General provisions to the Immigration Rules. In so doing, he had to demonstrate that he had earned more than £35,000 over the previous year. He had done so, though a mixture of employment and self- employment.
The Tax Returns for this period were submitted by the same Accountant at the end of January 2011.
Several years later he sought a mortgage and was told by his Broker that he would need to supply his Tax Returns, which he had never received from his Accountants. Once these had been obtained from the HMRC, they revealed an under declaration of £16,000. Our client paid the outstanding sums due on the tax.
In 2018, he applied for Indefinite Leave to Remain, and the Home Office responded by asking him to complete a detailed questionnaire of his financial past. It was at the stage of the questionnaire’s completion that MAGNE & CO were instructed.
We prepared a detailed letter of representations and assisted our client in the completion of the questionnaire. The application for Indefinite Leave to Remain was refused and the matter came to appeal.
The Home Office asserted that in view of the sizeable discrepancy between stated income under the Tier One Scheme and at the subsequent tax declaration, our client must have been dishonest, in either inflating his income to secure permission to remain or subsequently diminishing his tax liability.
The primary difficulty our client faced was in rebutting the inference that he must have been complicit in the irregularity because it was too large to ignore.
We would disprove both potential inferences of dishonesty.
We provided objective evidence to demonstrate that our client had told the truth about his earnings at the time of his application for permission to remain. Specifically:
We enclosed a copy of the email exchange between him and his accountant where he attached the relevant invoices that lay behind his earnings claim.
We obtained the bank statements over the relevant period that showed the payments into his account.
These matched the management accounts prepared by the Accountants as part of the Tier One application for leave to remain.
We then had to prove that our client had not then lied about the tax returns by trying to amend the information previously submitted to the Accountant. Specifically: -
We obtained evidence from the Mortgage Broker which confirmed that our client had told him that he had never seen the tax returns.
At a pre hearing review, we elicited a concession from the Home Office that they accepted this evidence.
We submitted the Accountant’s Code of conduct which clearly sets out the obligation of the Accountants to question any irregularity that the client may produce and to cease acting where these are not reconciled.
We took a statement from the supervising Accountant and called him to give evidence in court.
The Accountant confirmed they had examined the files and there had been no record of : -
Any amendments to the stated financial earnings between the Leave to Remain application and the submission of the tax return.
Neither was there a record of a copy of the tax return being emailed or sent to our client for his approval prior to his submission.
The Accountant did explain that there was a record of the client having made overpayments in subsequent years.
He also described the various allowances that may or may not apply which can make it difficult for a start up to anticipate whether there would be a tax liability in the first year.
The Accountant , offered a plausible suggestion as to how the error occurred.
The appeal was allowed.
Since this case was heard , judgement has been handed down in the important case of Balajiari & Ors v Secretary of State for the Home Dept . This is likely to lead to a re examination of many cases where settlement applications have been refused on the grounds of an inferred dishonesty in a past application. The judgement of Balajiari & Ors v Secretary of State for the Home Dept has two important ramifications
Firstly the Court of Appeal’s criticism of the Home Office’s procedure in assessing paragraph 322(5) has been so thorough that many refusals under this rule may now be unsafe.
Secondly, the Court of Appeal identified that the Tribunal in Shahbaz Khan v Secretary of State for the Home Department. was too quick to permit an inference of dishonesty from a discrepancy.
The upshot is that many refused under paragraph 322(5) may argue that their cases should be re -examined again.