A Little Taxing - Tier 1 General Migrants Applying for Settlement in the UK

Many will be aware that the Tier 1 General category closed to new applicants on 31 March 2011. Extension applications were no longer accepted from April 2015 and those remaining Tier 1 General migrants are required to make settlement applications (provided of course that they qualify) no later than 5 April 2018. 

Who qualifies for settlement?

A Tier 1 General migrant may apply for settlement after five continuous years of lawful residence in the UK. In addition to passing the Life in the UK test and meeting the normal absences threshold, applicants must also score a sufficient number of points across a range of criteria including:

• age;
• English language;
• education; and
• earnings.

The latter requirement will be the focus of this article.

For self-employed applicants, or applicants who are taxed as both an employee and as a self-employed contractor (i.e. a director of a company who also freelances), however, the situation can be far more complex. Where an applicant is claiming earnings for self-employment in the UK, it is a mandatory requirement to provide additional documentation to demonstrate that earnings are genuine and taxed appropriately.

A worrying trend

Last month, the Daily Mail reported the story of Dr Kazmi, who worked at Birmingham’s Queen Elizabeth Hospital and faced deportation after a failed settlement application. The refusal was due to an HMRC tax issue related to a failed business venture, which presumably meant that he did not obtain sufficient points for the earnings requirement of the application.

Whilst Dr Kazmi’s visa type has never been confirmed, it is likely that he held a Tier 1 General visa. This is because the basis of his refusal has become an unfortunate trend noted by a number of practitioners. Many have reported seeing an increase in refusals for settlement applications where there are discrepancies in the evidence of earnings submitted to the Home Office and the earnings declared to HMRC. This has also included evidence submitted as part of a previous Tier 1 General application and not the settlement application under consideration.

Of further concern, however, is the Home Office’s tendency to also combine the reasons for refusal using the “General grounds for refusal” provisions, in particular:

“the undesirability of permitting the person concerned to remain in the United Kingdom in the light of his conduct”

What does this mean?

If a Tier 1 General application is refused, the applicant has only 14 days to submit an administrative review. This requires the Home Office to re-examine the case within 28 days, looking for an error in the decision-making process, based on the facts and documents originally presented. Whilst the administrative review is under process, the applicant may continue to live and work in the UK. Unless there has been a blatant error in the Home Office’s judgement, this is likely to attract a similar decision.

If a decision refers to the applicant being of ‘undesirable character’ or having behaved with ‘undesirable conduct’, this may even carry removal directions, providing them with a very limited time to finalise their personal and business affairs and leave the UK.

Further, a refusal on the “general grounds” invariably would mean a future immigration application would become more difficult. This is because an applicant would be expected to demonstrate why any previous grounds for refusal would not apply on a subsequent application - in no way an easy task.

Some top tips for those relying on self-employed earnings

It goes without saying that collating and aligning financial evidence is by no means an easy task, especially where complex tax and payment structures exist. With the added pressure of a looming submission deadline, applicants may well ‘throw in their lot’ and be inadvertently caught short by the lack of transparency over their true earnings.

In view of the above, some top tips to help applicants who have not yet submitted a settlement application include:

1. Seek legal advice before the submission of an application where concerns are held regarding financial evidence.
2. Ensure that any earnings previously declared as part of a Tier 1 General/ILR application can be easily explained.
3. Clearly set out with evidence and preferably with the help of an accountant, any instances of discrepancies with earnings declared to HMRC.
4. If asked to attend an interview, request permission to be accompanied by a legal representative.
5. If the nature of self-employed earnings is so complex and concerns remain over tax payments, consider making an application to remain in the UK on another basis where possible (e.g. Tier 2).