Scottish Perspectives on Paragraph 322(5) and ILR

Oji (Nigeria) v Secretary of State for the Home Department [2018] CSOH 127

The petitioner, or claimant, Mr Collins Oji was a Nigerian national who applied for indefinite leave to remain (ILR) on 19 February 2016 along with his dependent spouse on the basis of five years residence as a highly skilled Tier 1 (General) migrant. On 3 November 2017 his application was refused principally by making reference to paragraph 322(5) of the Immigration Rules. In other words, owing to his character and conduct the decision-maker considered that it would be undesirable to allow him to remain in the UK. The refusal was predicated on the finding that in his antecedent application Mr Oji had declared different sums of income to Her Majesty’s Revenue and Customs (HMRC) and to UK Visas and Immigration (UKVI). The decision-maker also found that the earnings’ discrepancy meant that Mr Oji failed to prove his genuine earnings in the preceding 12 months with the result that he was treated as having had no earnings and hence failed to accumulate the requisite points to acquire ILR. An administrative review of the decision was refused on 6 December 2017. Upon challenge, Lord Tyre opined that paragraph 322(5) is not restricted to any certain “type” of case. But the court was equally attracted to Spencer J’s approach in R (Khan) v SSHD (Dishonesty, Tax Return, Paragraph 322(5)) [2018] UKUT 384 (discussed here) and it reduced (quashed) both the refusal of ILR and the administrative review upholding the refusal.

In refusing the application, the decision-maker relied on paragraphs 19(i) and (j) of Appendix A of the Immigration Rules which list factors that are relevant in assessing, on balance of probabilities, the genuineness of the earnings claimed by an ILR applicant. From 1 February 2015 to 31 January 2016, Mr Oji claimed earnings of £55,220 which consisted of salaried earnings and self-employed earnings. The decision-maker observed that in his Tier 1 application dated 25 January 2011 Mr Oji claimed total earnings of £56,140 (including £37,380 self-employed earnings) from 1 March 2010 to 10 January 2011. Moreover, in his application dated 29 January 2013 he had claimed total earnings of £56,331 (including £34,300 self-employed earnings from 21 January 2012 to 20 January 2013). The decision-maker observed that in 2010/11 and 2012/13 declared self-employed net profits of £5,310 and £5,350 were revised and Mr Oji subsequently declared self-employed net profits of £37,379 and £34,300 for those years.

The refusal said that he had made self-serving declarations to misrepresent his real earnings to HMRC in order to reduce his overall tax liability or that he gave false information about his earnings to UKVI in order to obtain leave to remain, or both. Relying on paragraph 322(5), the refusal said that his character/conduct made it undesirable for Mr Oji to remain in the UK. Although not mandatory, the refusal under paragraph 322(5) was deemed to be appropriate by the decision-maker in light of Mr Oji’s actions. The points scoring requirements stipulated that he needed 80 points for ILR but doubts over the genuineness of his earnings meant that he only scored 40 points and his application fell to be refused.

On 30 November 2016, Mr Oji was interviewed and the Home Office official who conducted the interview asked 37 questions. He was asked about his sources of income, the nature of his employment duties and his self-employed work, the organisation of his business, and the name and address of his accountant.

His declarations of income and any discrepancies between amounts declared to UKVI and to HMRC were not explored or raised and the interviewing official assessed Mr Oji as credible. His recommendation summary stated: “Credible based solely upon interview. Requires caseworker to place answers into context with rest of application in order to make full credibility assessment.” The refusal noted that the he had been invited to an interview, but no further reference was made to the details recorded in the “Temporary Migration Credibility Interview Template (Tier 1 General)”.

The UKVI guidance on paragraph 322(5) states that it should be applied cases involving criminality, a threat to national security, war crimes or travel bans. A criminal conviction is unnecessary for the provision to apply.

Outer House, Court of Session, Scotland

During the course of his Opinion, Lord Tyre considered a raft of authorities from England and Wales such as Sagar Arun Samant [2017] UKAITUR JR65462016 (discussed here), Parveen and Saleem [2017] UKAITUR JR94402016, Sandeep Kadian [2018] UKAITUR HU117232016 and several others to conclude that while these cases turned on their own facts, he nevertheless found assistance of general principle from them. Lord Tyre did not agree with the view of the Upper Tribunal in Sandeep Kadian that “not declaring all relevant income, whilst highly regrettable, cannot properly be described as conduct such as that set out in the policy guidance.”

The Scottish court was attracted to Spencer J’s approach in Khan where he gave general guidance to avoid the mistake the Home Office and its lawyers had made, namely making the harsh finding of dishonesty without properly conducting the decision-making process. Setting out the guidance given by Spencer J in Khan in full, Lord Tyre did not associate himself with earlier cases such as Varghese and Abbasi which might have suggested that a lesser degree of inquiry was required of the Home Office in comparison to the views of Spencer J in Khan. He was also referred to the earlier authority of Ngouh [2010] EWHC 2218 (Admin), an earlier paragraph 322(5) case with very different facts where Foskett J held that the balancing exercise required by paragraph 322(5) had not been carried out in a way that engaged with the true issues and reached a rational view. Thus, the decision-making process overall demonstrably failed to address fairly and fully the true issues. The decisions were quashed and remitted for reconsideration.

Ngouh concerned a Cameroonian national who had an otherwise distinguished army career that was blemished by an admitted sexual assault. His application for ILR was refused. Drawing attention to paragraph 120 of Ngouh – where Foskett J linked the use of by paragraph 322(5) to the spectrum of criminality and said that at the lower end the decision-maker’s reasoning would need to be focused and compelling – Lord Tyre held that:

17. … The passage emphasises that the respondent must, in such circumstances, adopt a balanced approach in determining whether it is desirable to grant ILR. It does not, however, in my opinion, cast doubt on the entitlement of the respondent to reach the view, in a particular case, that it is not desirable to grant ILR to an applicant who has deliberately submitted false information regarding his income to either HMRC or UKVI.

Mr Oji submitted that (i) on an ordinary and correct reading of paragraph 322(5) his conduct did not rationally fall within the scope of the rule because it did not meet the threshold of seriousness, (ii) the decision-maker had failed to discharge the burden of proving wrongdoing on his part, (iii) the decision was procedurally unfair because he had not been given an opportunity to respond to the allegation of wrongdoing before the decision was reached, and (iv) absenting the finding of deception against him his self-employed earnings would qualify for ILR. He argued that the rejection of the material provided in support of the ILR application was in any event inconsistent with the finding at interview that the petitioner was credible.

The government argued that (i) the decision was not unreasonable or irrational, it was based on big discrepancies in his tax declarations, (ii) his behaviour fell within the scope of paragraph 322(5) because it called into question his conduct and character, (iii) no evidence was provided to explain the discrepancy, mere assertion was insufficient, (iv) there is no absolute duty to put the matter to the applicant for comment before making a decision, given that the discrepancies were so large, (v) Ngouh was easily distinguishable as it concerned a soldier who served in Iraq and was honoured with a medal, and (vi) refusal of leave under paragraph 245CD did not stand or fall with the refusal under paragraph 322(5), the finding that the declaration of earnings in the ILR application was not genuine was freestanding, and did not depend upon any finding regarding character or conduct.

The court found that the reference at the end of paragraph 322(5) to a threat to national security does not impact the approach that must be taken to the more general notions of conduct, character or associations preceding it. Rejecting the submission that the circumstances of the present case were not capable of falling within paragraph 322(5) because they were of insufficient seriousness, Lord Tyre held that:

25. There is nothing in the wording of paragraph 322(5) itself to restrict the respondent’s discretion in this way. There is no “type” of case to which the paragraph is restricted. The reference at the end of paragraph 322(5) to a threat to national security does not, in my view, colour the approach that must be taken to the more general notions of conduct, character or associations which precede it. Viewing the matter through a Wednesbury lens, it would not, in my opinion, be appropriate for a court to hold that it is necessarily unreasonable or irrational for the respondent to decide that it is undesirable for an applicant to remain in the UK because he has deliberately submitted false information about his earnings to either HMRC, with a view to evading his income tax liability, or to UKVI, with a view to providing false information in support of his application.

The Court of Session did not think that it would be right to treat the guidance on paragraph 322(5) as restricting its scope. Guidance on “the main types of cases” that might need consideration for refusal does not preclude the possibility of there being other types of cases where paragraph 322(5) might be used. In any event, on the wording of the guidance, deliberate tax evasion involves criminality despite the fact that offenders commonly pay financial penalties rather than be prosecuted in a criminal court. But any wrongdoing cannot simply be assumed and very different considerations apply where an incorrect tax declaration is made because of carelessness or inadvertence. Refusing ILR to someone who acted carelessly would be much more difficult to justify and therefore Spencer J stressed in Khan the necessity of conducting a proper fact-finding process so as to be satisfied that there has been deliberate foul play.

A finding that a person has attempted either to evade tax or to falsely inflate his income for ILR purposes is a serious one, with potentially very grave practical consequences if it results in refusal of leave. It must be established on a balance of probabilities that an incorrect declaration has been intentionally made to HMRC or UKVI. Without a plausible explanation regarding the discrepancy, the decision-maker might reasonably conclude that there has been intentional underreporting of income to HMRC. The court explained that:

27. … The fact that the under-declaration has subsequently been corrected will not necessarily tip the balance in favour of the applicant, especially if the correction took place at or around the same time as the submission of an application for ILR. As mentioned earlier, Appendix A to the Immigration Rules gives express notice that the respondent may carry out a process of verifying previous earnings claims with declarations made to other government departments. The respondent might well form the view, in a particular case, that it was the prospect of such a verification exercise that prompted the correction, rather than a belated and unconnected realisation that an error had previously been made.

Lord Tyre rejected the analysis developed out of Foskett J’s judgment in Ngouh that the decision-maker must always conduct a two stage process of (i) deciding whether there has been undesirable conduct and then, (ii) considering whether there are positive factors that outweigh the conduct and render it desirable to grant leave to remain. The court opined that if the decision-maker has properly considered the evidence and reached a rational conclusion that there has been a fraudulent attempt to evade tax, the decision whether that is sufficient to render it undesirable for an applicant to be granted ILR is a matter for the Home Office, and is not to be called into question by the court.

Examining the above against the facts of the present case, the decision-maker set out the full details of earnings claimed in the past years in Mr Oji’s earlier applications and the underreported self-employed earnings declared to HMRC. The decision-maker noted that the onus rested on the applicant to have correctly declared his earnings. Mr Oji’s lateness in seeing any errors cast serious doubt upon his credibility and so he had intentionally misrepresented his earnings to either HMRC or UKVI. However, Lord Tyre held that:

30. In my opinion the mere fact that different amounts were declared to HMRC and to UKVI did not constitute a sufficient basis for the conclusion that the petitioner had acted dishonestly and that it was accordingly undesirable to grant him permission to remain. The letter does not contain any indication that the respondent addressed her mind to the question whether the discrepancy indicated inadvertence on the one hand or intentional wrongdoing on the other.

He further judged that:

No reason is given for the conclusion that there was a deliberate under-statement or over-statement of income in one or other of the declarations. In the circumstances of the present case, one would have expected the respondent to explain why an inference of dishonesty was to be drawn despite not having afforded the petitioner an opportunity to explain how it came about that he declared such small amounts of self-employed income by comparison with the amounts declared to UKVI and subsequently to HMRC when the amendments were submitted.

The refusal of ILR had to be reduced as it was unreasonable according to Wednesbury principles. Although the decision-maker was not bound to any explanation as plausible or satisfactory, the difficulty with the decision letter was that failed to demonstrate that any consideration was given to the finding of credibility in interview at which the discrepancy was not put to Mr Oji. All this reinforced the need for a balanced assessment in the light of all of the evidence, including any explanation offered by Mr Oji. Overall, without any assessment of whether there was evidence of deliberate misdeclaration as opposed to innocent error, the refusals could not stand.

Similarly, the refusal under paragraph 245CD that Mr Oji had insufficient points to qualify for ILR was unsustainable because it was flawed because of the failure to consider whether the discrepancies could be explained in a way which did not cast doubt upon the genuineness of the figures submitted in the ILR application. Overall, Lord Tyre granted the motion to reduce the refusal decision and the administrative review decision.

Comment

Significantly, Lord Tyre preferred Spencer J’s approach in Khan and remained suspicious of the approach in Varghese where the Upper Tribunal rejected the submission that any procedural unfairness occurred as a consequence of no prior consultation with the applicant. But he also made it plain that the national security aspect of paragraph 322(5) does not cancel out the conduct, character or associations dimensions of the rule.

In its recent review of paragraph 322(5) cases, the Home Office is adamant that decision-makers acted quite reasonably in approaching Tier 1 (General) cases by refusing ILR where there were significant discrepancies and self-serving and dishonest declarations were made. The review asserted that paragraph 322(5) cases are not generally “minor tax errors” matters and in 88 per cent of cases the discrepancies between the total earnings declared to the UKVI and those shown by HMRC records were well over £10,000.

However, the present case provides a different perspective because the discrepancies in Mr Oji’s records were greater than £30,000. But in light of the overall circumstances and the manner in which the decision-making was delivered left a lot to be desired and Lord Tyre did not hesitate to grant relief to Mr Oji and his dependent wife Mrs Oji. The outcome of the case shows the importance of maintaining fair and effective procedures in immigration decision making without which the Home Office is likely to lose even open-and-shut cases. In the matter of Dadzie [2018] CSOH 128, where the tax discrepancy was in the £12,000 range and paragraph 322(5) had been used, Lord Tyre took a similar view and reduced the refusal decision and the administrative review decision.

About Asad Ali Khan, BA, MSc, MA, LL.B (Hons), LL.M

Senior Partner, Khan & Co, Barristers-at-Law
This entry was posted in False Statements and Misrepresentations, Immigration Rules, Judicial Review, Nigeria, Paragraph 322(5), PBS, Scotland, Tier 1, Working and tagged , , , , , , . Bookmark the permalink.

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