Tier 1 (General): Perspectives on Paragraph 322(5) and ILR

Cases in the Tier 1 (General) category present an outrage because we would not really expect highly skilled migrants to be punished for being honest by paying their taxes. Similarly, we would also not expect migrants who add value to the economy to be penalised by the deployment of those parts of the rulebook which are reserved for people who present a threat to the UK’s national security. But since we live in a society where the government has even resorted to deporting its own citizens we should not be so surprised that it behaves in an oppressive manner towards mere foreigners. Tier 1 (General) used to be a freestanding way for the UK to attract skilled migrants to its shores. Notably, under part 9 (grounds for refusal) of the Immigration Rules, the provision in paragraph 322(5) operates on the basis of “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.” No authoritative case law exists on the use of paragraph 322(5) but it has infamously claimed more than a thousand victims. The paradox is that all sorts of professional people are caught up in pretty dreadful predicaments because of the rule’s usage which is indiscriminately being applied in relation to tax discrepancies as little as £1.2 and £1.6.

Take Saleem Dadabhoy for example. An honest businessman who spent many years of his life injecting value into the British economy, he was strangely rewarded for his efforts with a paragraph 322(5) refusal. His forced departure from the UK will lead to the closure of a company worth £1.5 million and will render 20 people unemployed. He also has a sick child from whom he is separated. Despite conceding that his conduct was not dishonest or fraudulent, the Home Office wishes to remove him nonetheless. The official guidance for operating the rules does not envisage that the paragraph 322(5) power should be used to target tax discrepancies at all. After quite a long period of legal uncertainty, in Khan (Dishonesty, Tax return, Paragraph 322(5)) [2018] UKUT 384 (IAC)  Spencer J allowed the claim and gave much needed guidance and addressed points such as the drawing of an adverse inference, fact finding and determining the inference of dishonesty, the standard of proof and dishonesty, blaming accountants and shutting one’s eyes, carelessness as opposed to dishonesty, legitimate questions, and disclosure and evidential matters. But as discussed below some of the earlier unreported judicial review claims tell another story.

Parveen and Saleem

In Parveen and Saleem [2017] UKAITUR JR94402016, legal proceedings that are not connected to Saleem Dadabhoy, UTJ Gleeson remained highly dismissive and refused permission in a judicial review claim where a husband and wife from Pakistan sought to challenge the decision-maker’s reliance and use of paragraph 322(5). The couple were refused ILR because the wife, who was the main Tier 1 (General) applicant, under-declared her income to HMRC for the purposes of tax in 2011 and 2013. As in most such cases, HMRC were content to accept the tax later on a payment plan, but of course that was not good enough for either the Home Office or the Upper Tribunal and it was their view that leave had been obtained by deceit or deception.

The additional tax to be paid in Parveen’s case was more than £15,000 but she paid only £3000, and opted to pay the rest in installments over nine years. UTJ Gleeson thought that Parveen gained a significant financial advantage by not paying her tax when it was due. When Parveen went for her premium service appointment, she was provided a further questionnaire about the accuracy of her tax returns. But she confirmed that her returns were accurate and did not use the opportunity to correct any innocent mistakes. UTJ Gleeson did not think that her actions and continuing non-disclosure were pardonable. Taking a very strict view of things, she held that:

59. It could be argued that the applicants’ conduct also engages paragraph 322(1A) and paragraph 322(2) but I am not concerned with those provisions: it is a matter for the respondent to decide which sub-paragraph she relies upon in any decision, and judicial review applies only to the decision she took, not a different decision which she might have taken.

This judgment is an indictment for the Upper Tribunal because UTJ Gleeson allowed the respondent Home Office to habitually breach directions. Judicial double standards are all too apparent because she waived the rule-based requirement for the Home Office to file a skeleton argument and oddly allowed the detailed grounds to stand in its place. The case of Kamal, discussed below, shows repeat offending in filing a skeleton argument by the Home Office.

Kamal

In Kamal [2017] UKAITUR JR114172016, the Pakistani applicant entered the UK as a Tier 4 (General) student. He then obtained a Tier 1 (Post Study Work) visa and subsequently switched into the Tier 1 (General) framework. In April 2011 in his Tier 1 (General) application, Kamal claimed total earnings of £40,665.74, or £6070.74 from Euro Car Park and £37,850 from self-employment. However, in his HMRC tax return for the same year, he claimed and paid tax on total earnings of £12,330, being £9557 salary and £2773 for self-employment.

In January 2014, nearly 3 years after filing his incorrect tax return, he notified HMRC of an under-declaration for 2010/2011. He subsequently declared that he had earned £9557 for employment, but just £26,713 for self-employment, not £34,595 as asserted in his Tier 1 application in April 2011. He did not bother to declare (or even explain) a continuing discrepancy of £7,882 between the April 2011 self-employed income and the January 2014 adjustment. Overall, the authority of AA (Nigeria) [2010] EWCA Civ 773 failed to assist him in his case and his judicial review claimed failed.

However, the Home Office employed the dubious tactic of seeking permission to file a combined “skeleton argument and detailed grounds of defence” which UTJ Gleeson noted was “not a good one” because detailed grounds of defence serve the purpose of giving the applicant an opportunity to refine his pleaded case in the light of what the respondent says. An important subsequent document, a skeleton argument should be filed when all the evidence and pleadings have been received. It serves the purpose of assisting the judge and the other party by focusing the arguments to be considered during the hearing. UTJ Gleeson thought it was inappropriate to conflate these two documents and she was unimpressed with the fact that the government filed the detailed defence just one clear working day before the substantive hearing. But beyond making these observations, she maintained a soft touch to disciplining the government and its lawyers. On the harsher side, she refused permission to appeal in any event.

Sagar Arun Samant

In the judicial review case of Sagar Arun Samant [2017] UKAITUR JR65462016, there was a difference in the figures put to HMRC and the figures put to the Home Office. Samant’s accountants said that they were pleased to assist him in the acquisition of his immigration status. However, he still claimed that he had been poorly advised by his accountants and any tax discrepancies were not his fault and HMRC had not sought to penalise him. The decision-maker applied paragraph 322(5) to refuse ILR to Samant because, based on his character and conduct, he had been deceitful or dishonest in his dealings with HMRC because of deliberately trying to reduce his tax liabilities. He denied that he had deliberately misled HMRC or the Home Office.

Noting that a heightened civil standard of proof applied, Collins J was of the view that in the absence of any statement from the original (or subsequent) accountants it could not be said that the decision-maker had acted irrationally. The judge said that any professional confirmation of poor advice by the accountants would be positive evidence and “would be an exceedingly powerful point in his favour.”

Statutory Appeals

People have fared much better in statutory appeals in comparison to judicial review proceedings. With much more improved facts in comparison to the above cases, in Naveed Anwar [2017] UKAITUR HU131062015, the decision-maker resorted to using paragraph 322(5) and alleged that a Pakistani Tier 1 (General) applicant for ILR was of unsuitable character because of the non-payment of £1.60 tax, whilst ignoring the £14,074.70 that Anwar had paid in tax. It was also the case that the genuineness of his earnings was not accepted. The FTT upheld the finding that the use of paragraph 322(5) was suitable and that deception had been practised. However, noting that credibility was an issue, UTJ Smith remitted the appeal to the FTT for the decision to be remade.

In Sandeep Kadian [2018] UKAITUR HU117232016, DUTJ Taylor took a robust no nonsense approach to an earlier FTT decision where an Indian applicant was refused ILR on the basis on 10 years’ lawful and continuous residence. Again, the decision-maker alleged that the applicant, Kadian, had failed to disclose his earnings in full to HMRC for the tax years 2010 to 2011. Accordingly, it was undesirable for him to remain in the UK based on the fact that he had been deceitful or dishonest in his dealings with HMRC. The UT was unimpressed that no other reason had been proffered by the decision-maker in relation to refusing ILR on the basis of 10 years’ lawful and continuous residence. Keeping things very manageable, DUTJ Taylor simply said this:

19. This is a human rights appeal. The conclusion that the respondent’s decision to invoke paragraph 322(5) is inconsistent with her own policy guidance reduces considerably the weight to be attached to the public interest in this refusal.

It was not possible to understand what the public interest could be if Kadian did in fact meet the requirements of the Immigration Rules for ILR. Therefore, the refusal was disproportionate and the matter was remitted to the FTT to be heard afresh by a different judge. Importantly, there are strong indications that the FTT is taking a softer stance against migrants who are accused of falling foul of the draconian paragraph 322(5) provision. On the other hand, such trends make an interesting contrast with the outcome in Muhammad Siddique [2018] UKAITUR HU057722016. Cases involving a pattern of large discrepancies are bound to fail even if the original accountant clarifies in writing that any mistakes were not the applicant’s fault and were in fact the fault of the accountant.

Comment

Refusals using paragraph 322(5) of the rules represent yet another facet of the intractable problems created by the government’s hostile environment policies. Many people do lie in their immigration applications but the paragraph 322(5) cohort of cases will inevitably contain a very high percentage of people who have in fact done nothing wrong at all and are nevertheless being victimised by the Home Office merely for making the mistake of adding value to the UK economy because of their skill and ability. In other words, they are the “brightest and best talent” on offer to British society but are being punished for their contributions. All this violates the “clear promise” which Theresa May made in 2012 in her capacity as Home Secretary. Tier 1 refusals connected to paragraph 322(5) will receive further judicial treatment and in the coming days we shall learn more about connected problems confronting highly skilled migrants such as right to work, rent and access to the NHS. In the meantime, a party seeking to rely on an unreported case may only do so with the tribunal’s permission.

If anything, the facts of Parveen and Saleem also prove that the costlier premium service puts applicants in a precarious position and allows the Home Office to coerce them by filling out further questionnaires on the spot. Notably, in a postal application, an applicant would have much more time to take professional advice on how to answer a further immigration questionnaire on their tax returns.

The fact that in Parveen and Saleem UTJ Gleeson relieved the government from filing a skeleton argument is quite a serious example of nepotism. Despite the fact that such convenience would never be afforded to an applicant, I can still vouch for UTJ Gleeson because she does wield the axe with both hands and also tends to discipline the respondent when GLD frivolously makes undisclosed and unserved applications to “extend time”. Nevertheless, it would be nice if the rules on not serving the other party found in SB (Afghanistan) [2018] EWCA Civ 215 and R (Sathivel) [2018] EWHC 913 (Admin) are applied equally to both parties. Otherwise there is no natural justice. After all, the importance of proper service of proceedings is not in doubt and deliberate omissions in effecting service amount to improper conduct and serious failings under the Hamid [2012] EWHC 3070 (Admin) jurisdiction. When, if ever, will the judiciary take action against the government and its lawyers for ripping up the procedural rulebook?

In Kamal, the fact that the government filed detailed grounds of defence one day before the substantive hearing seemed to have made no difference at all. Another point worth making is that the government often proceeds with substantive judicial review hearings without filing a defence at all. They also usually breach directions by filing the skeleton argument, if one is filed at all, on the day of the hearing. But none of this matters and their disrespectful and unprofessional behaviour is tolerated and they are even permitted to call Tokyo, Beijing and Bangkok to take instructions from the entry clearance officer on the day of the substantive hearing. Judges usually tolerate misconduct, time-wasting and serial breaches of directions by the government and a lot of progress needs to be made to level out the playing field in that regard.

Worse still is the predicament that the immigration minister Caroline Nokes has been accused of repeatedly misleading MPs about the precise numbers of successful of judicial review claims in relation to paragraph 322(5). Nokes maintains that 38 appeals had been allowed on human rights grounds but that no judicial review claims had been successful whereas in reality the government has conceded numerous claims out of court to save itself the humiliation of suffering colossal defeats in substantive hearings. Hopefully, JR/3907/2017 will provide further answers for victims of paragraph 322(5) and I will update things in light of the outcome in that important judgment if and when it becomes available in the public domain.

It is said that the Home Office is fighting a tactical battle. According to Nokes, if we can trust her figures, 427 appeals and judicial reviews are in progress. She also claims, probably incorrectly of course, that persons with section 3C leave whose applications are pending continue to enjoy their rights to work, rent and access NHS services. She also contends that 249 of the cases in this grouping involve discrepancies in excess of £10,000 and that only a handful of applicants sought to amend their tax records within the 12 months prior to making their applications.

Nokes is adamant that the use of paragraph 322(5) is “correct” because of clear conflict between tax declarations made with HMRC and earnings claimed by migrants on their application forms. The discrepancies, she stresses in her letter to Yvette Cooper, show a “clear pattern” of tax evasion. Nokes also stated in the letter that the use of paragraph 322(5) has been suspended pending further review. Also under review is the use of the provision in long residence applications for settlement. Meanwhile people like Saleem Dadabhoy are very keen show that they are not a threat to the UK’s nationality security. They want to set the record straight that they are not terrorists and are in fact highly skilled migrants who have paid their taxes and have added value to the British economy.