New Court Case on Tax Discrepancies and Immigration Applications
Hot on the heels of new Home Office guidance on Indefinite Leave to Remain (ILR) applications where there are apparent financial or tax discrepancies, there is now a reported immigration appeal court case on Immigration applications and tax discrepancies. The Home Office guidance and the court case address the issue of Immigration or settlement applications where different earnings are declared to the Home Office in the Immigration application form to the income declared to the tax office (HMRC) in the tax return.
If you need advice about your immigration application or if you’ve had your immigration application refused call London based OTS Solicitors on 0203 959 9123 and speak to one of our experienced immigration solicitors or complete our online enquiry form.
The tax discrepancy dilemma
Prior to looking at the new court ruling in Abbasi (rule 43 para 322(5): accountant evidence) [2020] UKUT 27 (IAC), it is best to remind ourselves of why the tax discrepancy issue is such a problem for Home Office visa applicants and those applying for Indefinite Leave to Remain.
With a more joined up approach between government departments and agencies, the Home Office and the HMRC have, in recent years, spotted an increased number of cases where they believe that income declared to the Home Office is inconsistent with income declared to HMRC over the same time period.
Why would anyone make such a mistake over their financial affairs? Put bluntly, Home Office officials often do not think that the discrepancy in income levels between the Home Office application form and the tax return form are a mistake but instead either:
- A deliberate attempt to overinflate earnings so that the Home Office visa or settlement applicant meets the financial requirement criteria relevant to their Immigration application or
- A deliberate attempt to reduce their real earnings when submitting the HMRC application form with a view to reducing the amount of tax payable to HMRC.
From a Home Office perspective, if a visa applicant or applicant for settlement has either inflated their income for Home Office application purposes or reduced their income for HMRC purposes this should affect the prospects of a successful Home Office application. The Home Office relies on paragraph 322(5) of the Immigration Rules.
Paragraph 322(5) of the Immigration Rules
Paragraph 322(5) of the Immigration Rules says an Immigration application should be refused if it is undesirable to permit an applicant to stay in the UK because of their conduct.
Conduct under paragraph 322(5) of the Immigration Rules is widely defined. It isn’t restricted to criminal convictions for serious offences. It encompasses behaviour that includes dishonest conduct, such as reporting incorrect information about financial circumstances to the Home Office.
False representation or conduct under paragraph 322(5)
The Home Office guidance on tax discrepancies indicates that:
- In a case of over declaration of income (normally this only occurs in cases where the Home Office applicant is self-employed) this may be a case of conduct under paragraph 322(5) of the Immigration Rules. This means the conduct can be the basis for the refusal of the Immigration application if it can be shown that there was an element of dishonesty (rather than an innocent mistake by the visa applicant or their professional advisor)
- In a case of under declaration of income (normally this only occurs in cases where the person completing the HMRC tax return is self-employed) this may be a case of false representation and a ground of refusal of the Home Office Immigration application. A refusal on the basis of false representation would not be justified if the problem with the HMRC tax return was an innocent error or a mistake by the accountant who prepared the tax return.
Accountants and Immigration applications
If an accountant takes the blame for any discrepancy between the information provided to the Home Office and HMRC you would think that this would be the best way to secure a successful immigration appeal.
The case of Abbasi (rule 43; para 322(5): accountant evidence) [2020] UKUT 27 (IAC) looks at the role of accountants and them shouldering the blame for tax discrepancies in information given to the Home Office and HMRC.
In the case of Mr Abbasi, he applied for Indefinite Leave to Remain. His ILR application was refused using paragraph 322(5) of the Immigration Rules. The Home Office said they thought that there was dishonesty as different financial information was given in Mr Abbasi’s Indefinite Leave to Remain application and his tax return.
Mr Abbasi appealed the refusal of Indefinite Leave to Remain to the First-tier Tribunal and won his case. The tribunal decided that a mistake had been made by Mr Abbasi’s accountant because Mr Abbasi’s tribunal case was supported by a letter from his accountant acknowledging that the mistake was theirs and not down to Mr Abbasi.
The Home Office appealed to the Upper Tribunal but failed. As a result of the failed appeal, the Home Office granted Mr Abbasi Indefinite Leave to Remain. You would think that would be the end of the tale but there is a twist. The accountants who had supposedly advised Mr Abassi wrote to the tribunal to say that they had not heard of him and as they had not completed paperwork on his behalf, they could not have made a mistake.
By the date the letter was received by the tribunal the appeal was over and the tribunal could not re-open the proceedings. Furthermore, the Home Office had granted Indefinite Leave to Remain because it had failed in its appeal to the Upper Tribunal.
Will Mr Abassi retain his Indefinite Leave to Remain? Probably not, as immigration solicitors fully anticipate that the Home Office will take the decision to revoke Mr Abbasi’s Indefinite Leave to Remain.
The importance of Mr Abbasi’s case to London immigration solicitors lies in the guidance on future appeals based on the argument that it wasn’t the Home Office Immigration applicant that got the information provided to either the Home Office or HMRC wrong, but their accountant.
The Upper Tribunal said if an accountant says that they made a mistake with HMRC or Home Office supplied information then the accountant should file a formal statement of evidence and potentially attend the tribunal hearing. If the accountant does not file a statement (or attend the appeal hearing if required) then the tribunal is unlikely to place weight on a letter supplied by the accountant. Attending a tribunal hearing and providing a full and detailed statement is likely to be far more onerous for an accountant and may mean that they are more reluctant to become involved. That is because the tribunal guidance says the accountancy firm will need to address the following matters in their statement of evidence:
- Fully detail the circumstances in which the accountancy error was made
- Indicate whether a complaint was made and compensation paid
- State whether the complaint was referred to the accountant’s insurer or a relevant regulatory body.
Home Office applicants, accountants and immigration solicitors will rue the day that Mr Abbasi sent a letter to the Tribunal as whilst accountants might have been happy to acknowledge a minor error or misinterpretation the requirement for a full statement of evidence and reference to referrals to professional bodies may make an accountant more reluctant to become involved.
Likewise when an Indefinite Leave to Remain applicant asks the Home Office to consider representations made after receipt of a Home Office ‘minded to refuse’ letter the Home Office is now potentially likely to only take into account the argument that ‘it was the accountant’ if the accountant supplies the sort of detailed information identified in the Abbasi case.
Immigration solicitors
If you need advice about your immigration application or Indefinite Leave to Remain application or your appeal against a refusal on the grounds of paragraph 322(5) of the Immigration Rules then call London based OTS Solicitors on 0203 959 9123 and speak to one of our experienced immigration solicitors or complete our online enquiry form.
OTS Solicitors are experts in immigration law. The Immigration solicitors have substantial experience in applications for Indefinite Leave to Remain and in challenging refusal of ILR applications and visa appeals.
London based OTS Solicitors are Legal 500 and Chambers Guide to the Legal Profession recommended Immigration lawyers and have Law Society accredited solicitor status as trusted specialists in Immigration law.