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Latitude Law
  • General Immigration

It’s not all about 322(5) – the plight of the Tier 1 Entrepreneur


It’s not all about 322(5)

 

UK Visas and Immigration (UKVI), the arm of government responsible for deciding immigration applications made both in country and abroad, currently appears in something of a state of flux. In recent weeks its political masters at the Home Office have, in the light of negative publicity, charged it with reviews of “Windrush” cases and the “hostile environment” created to discourage illegal residence; the cap on Tier 2 sponsored worker entry; and the application of the general refusal ground at paragraph 322(5) of the immigration rules, in particular as applied to cases of Tier 1 general migrants seeking to settle.

 

That category of applicant – migrants who have completed 5 years’ residence but who have usually been identified as having issues with the accurate declaration of income for tax purposes – have organised and lobbied the government and parliament. It is their case that 322(5) shouldn’t be used to refuse their applications on grounds of poor character. They say the provision is aimed at individuals who transgress society’s norms in far more serious ways; that nobody who has under-declared income to HMRC can possibly have meant to do it.   While the arguments deployed in these cases – to a lawyer like me at least – may not seem particularly attractive, there is no doubt that political traction has been gained, and I wish these Tier 1 migrants luck in the Home Office review of their cases.

 

The plight of the entrepreneur

It is, however, treatment of another category of Tier 1 migrant – entrepreneurs who have invested a significant sum in a business they then run, creating jobs for resident workers along the way – which to my mind demonstrates far more worrying attitudes at UKVI.

 

  • Initial visa applicants

A putative businessperson looking to either enter or remain in the UK based on financial investment in an existing or new enterprise have always faced a fairly challenging documentary requirement. Their financial evidence must be in a precise form – something that overseas banks are often unwilling to help with – and offers of third party funding carefully documented.  This route has always formed part of the UK’s points-based system for managed migration; as the name suggests, it was a matter of providing evidence to gain points.  If the evidence was there, you got in; points meant prizes.

 

Following perceived abuse of the route, however, in January 2013 a significant subjective element was introduced by the Home Office. Applicants henceforth would face scrutiny of the detailed business plan they are required to produce, and often an interview in which their bona fides would be examined – perhaps counter-intuitively – by a time-served British government official unlikely to have any business experience whatsoever.

 

Visa refusal rates, already high in this category, soared after these changes to the rules; a freedom of information request that we made confirmed that the problem was significantly greater for applicants in certain parts of the world, particularly the ISC and China. The fairness of the interview process has now been subject to judicial scrutiny – see for example the helpful judgment of then President of the Upper Tribunal, Mr Justice McCloskey, in R (on the application of Anjum) v Entry Clearance Officer, Islamabad (entrepreneur – business expansion – fairness generally) [2017] UKUT 00406 (IAC), a case in which Latitude Law acted alongside counsel Nicola Braganza of Garden Court Chambers. The approach to that applicant’s interview was held to be unfair, with no sensible follow-up questions and an unreasonable refusal to allow him to refer to a lengthy written business plan in the course of the interview.

 

It is worth remembering at this point that – if you face perceived unfairness of this kind – your first remedy is an internal ‘administrative review’ which cannot really address the issue. The process can only succeed if a ‘caseworking error’ is accepted by UKVI, and remember you are not allowed to submit new evidence to rebut things you’re unhappy about.  Judicial review – in the Upper Tribunal (IAC) – is usually your first chance to challenge a refusal on wider, public law grounds such as procedural fairness or taking account of irrelevant matters.

 

  • Extending your stay

Towards the end of their initial 3-year visa, applicants must put together another significant set of documentation confirming, among other things, investment of their £50,000 or £200,000 and the creation of at least 2 full-time jobs for British or resident workers. In addition, similar subjective scrutiny as with the initial visa application now accompanies the (extensive) extension document requirement.  The rules require an individual to satisfy the Home Office of the following, amongst other things:

 

[T]he Secretary of State must be satisfied that:

(i) the applicant has established, taken over or become a director of one or more genuine businesses in the UK, and has genuinely operated that business or businesses while he had leave as a Tier 1 (Entrepreneur) Migrant; and

(ii) the applicant has genuinely invested the money referred to … into one or more genuine businesses in the UK to be spent for the purpose of that business or businesses; and

(iii) the applicant genuinely intends to continue operating one or more businesses in the UK

 

In making the assessment … the Secretary of State will assess the balance of probabilities. The Secretary of State may take into account the following factors:

(i) the evidence the applicant has submitted;

(ii) the viability and credibility of the source of the money …;

(iii) the credibility of the financial accounts of the business or businesses;

(iv) the credibility of the applicant’s business activity in the UK, including when he had leave as a Tier 1 (Entrepreneur) Migrant;

(v) the credibility of the job creation for which the applicant is claiming points

 

Delay has become a major issue for entrepreneur applicants, due at least in part to this added layer of subjective scrutiny. Every single extension applicant receives a standard letter from UKVI upon submission, advising that their case is complex.  Interviews are usually deemed necessary, which has meant waiting times now extend beyond 12 months in many instances.  This has serious implications for businesspeople who need to travel abroad, because the third major problem these applicants face is the unavailability of premium service centre processing.  Unless they are willing to stump up an additional several thousand pounds in super-premium processing fees, individuals must subject themselves and their family members to standard postal processing, which requires submission of all valid passports.  There is, it must be recalled, no mechanism for these to be returned pending processing – this is because an unfortunate side-effect of leaving the UK while your application is outstanding is the automatic abandonment of your application.

 

In-country interviews at extension stage are themselves, in our recent experience, similarly fraught with danger. Often combined with a visit to business premises, UKVI officials seem keen to the point of desperation to find fault.

 

Their initial contact processes also don’t help. In one of our cases, the client was contacted by SMS from an unrecognised mobile number, advising of the time and location of an interview and visit.  He suspected a scam text – sharing the information with friends and officials at his wife’s university sponsor compliance team, he was advised the whole thing looked dodgy, and he should report it.  This he duly did, receiving no response until he was emailed some weeks later by the Home Office, asking why he hadn’t met their official at his place of business on the allotted date.

 

Perhaps more worrying, however, is our clients’ experience of extremely lengthy questioning, and additional evidence being requested from them at interview stage. Remember they have already provided a large quantity of material, from director’s loan agreements and leases on premises to business bank statements and real-time payroll information, with their initial application.  During an interview / site visit which lasted all of 6½ hours, one client was required to supply a large amount of extra staff information for workers not relied upon for the job creation aspect of his case.  While arguably not a caseworking error for admin review purposes, attaching weight in a decision to such irrelevant evidence is a clear ground for judicial review.

 

In another worrying development, officials will often embark on fishing expeditions, finding fault for example with business concierge and receptionist services, and in particular with the content of a company’s website, including its archived versions.

 

Despite the name of the category, it is proving difficult for applicants to establish their genuine entrepreneurial intent if – to take one example – they have switched business focus in their first 3 years.

 

It was always the case – and still is, at least ostensibly – that an entrepreneur doesn’t need to succeed with their first, and possibly even subsequent, ventures. This being the point of entrepreneurism, one assumes.  Colonel Sanders, for example, repeatedly failed in business until, aged 65, he came up with the KFC brand. Thus, a private tutoring company might be criticised if, during this time, broader educational consultancy becomes its core activity.  How this demonstrates a lack of entrepreneurial intent is anybody’s guess.

 

And such criticism has extremely serious consequences – it will lead to refusal, with its attendant status difficulty in the event that admin review is unsuccessful. Remember that, while reapplication is possible (subject to a tight 14-day time limit), you become an overstayer at that point.  Your passport is retained by UKVI, preventing travel overseas, and you are technically prevented from continuing your business activity while waiting – again, often for many months – for a new decision.  In another recent case, our client’s compliance with this prohibition on working in his company pending a re-application decision led to refusal because – guess what – his business had fallen into inactivity.

 

It is anticipated that many of these cases, refused under what we will call for convenience the ‘genuine entrepreneur test’, will result in litigation. The courts will, we hope, identify and censure the folly of UKVI’s approach in due course. Maybe an honest band of entrepreneurs will – in the true spirit of their chosen immigration category – form an association to lobby politicians.  The Home Office should however be reappraising its handling of entrepreneur cases now, in the same way it has been persuaded – through political pressure – to review its use of paragraph 322(5) and how it has dealt with the Windrush generation.

 

It should in particular:

 

  • Recall the standard of proof – it’s a balance of probabilities, not beyond reasonable doubt
  • Arrange interviews and site visits through official correspondence or email, rather than via text message
  • Bear in mind the copious documentation already supplied by an applicant when considering whether to ask for more, and that such evidence is supplied to prove activity as at date of application, not of decision
  • Think carefully about the relevance of interview questions, and of additional evidence requested at interview stage
  • Consider training its staff in the mysterious art of business, so that for example changes of strategy can be better appreciated and understood, and given due weight, balancing out matters such as the misspelling of a word on a company website

If you would like to speak with one of our experts about your Tier 1 case, call us now on 0161 234 6800 (Manchester and London) or 0151 305 9600 (Liverpool).