Challenge to refusal of Tier 1 Entrepreneur

An applicant has successfully challenged the Home Office’s refusal of his application for further leave to remain in the old Tier 1 (Entrepreneur) route after obvious errors were made both procedurally and in the refusal letter. The case is R (on the application of Ghadam) v Secretary of State for the Home Department (Discretion – further enquiries – s31(2A)) [2024] UKUT 281 (IAC).

Background

The applicant is an Iranian citizen who arrived in the UK with leave to enter as a Tier 1 (Entrepreneur) Migrant on 11 July 2019. The applicant registered a business “Robin Investment Ltd” on 21 August 2019 which was then dissolved on 24 November 2020 having been affected by the pandemic. A second company “Payfar Limited” was registered on 11 August 2020 and dissolved on 30 November 2021. On 15 February 2021 he registered a company called “Level Three Technology Solutions Limited”.

On 23 November 2022 the applicant applied to extend his leave as a Tier 1 (Entrepreneur). On 5 March 2023 the Home Office asked for further information and also interviewed the applicant on 27 April 2023.

On 28 May 2023 the application was refused on the basis that the applicant did not score enough points under Appendix A (Attributes). The Home Office did not accept that he was engaged in the business activity in question at the time of the application. The refusal letter said that he had provided bank statements showing income from only one client with a very similar name to his business (“Level Three Trading FZE”) and that income only seemed to go into the bank account when business funds were low.

The refusal letter also said that the interview raised concerns about the credibility of the business, the Home Office said that the website given by the applicant for his business did not exist and the domain had not been registered. Also during the interview, the applicant had explained the transactions from the similarly named business as being from friends of his who he had known for 15 years. The Home Office concluded that this was not a genuine business and awarded zero points for this element.

The applicant applied for an administrative review of the decision, arguing that the Home Office had made an error with the website address and that the relationship with the similarly named business was an arms-length relationship between two separate legal entities with separate owners. The applicant explained that income was received from only the one client because his business was so new. The refusal decision was upheld on 17 July 2023.

The judicial review

The applicant applied for judicial review on 30 October 2023 on three grounds. The first ground of challenge was that the Home Office had misapplied Table 5 and paragraph 48(b)(iii) of Appendix A. The applicant said that the requirements were clear and he met them. The Home Office had not disputed that the applicant had registered as a director of Level Three and so he met the requirements of Table 5. He had provided a business bank statement that showed business transactions and had fulfilled the specified documents requirement at paragraph 48 of Appendix A.

It was submitted on behalf of the applicant that there was nothing in Table 5 of the rules that required the applicant to be “engaged in business activity at the time of the application”. The Home Secretary’s response to this point was that “to suggest that Table 5 and Paragraph 48 of Annex A entitled an applicant to score points automatically, without consideration of the genuineness of the business activity, ignored the provision of Paragraph 245DD(n).” Paragraph 245DD(n) states “If the Secretary of State is not satisfied with the genuineness of the application in relation to a points-scoring requirement in Appendix A, those points will not be awarded.”

The second ground of challenge was that “while the Respondent appeared to take issue with the genuineness of the Applicant’s business, the decision letter had stated explicitly that the Respondent had not carried out an assessment” of this as provided for in paragraph 245DD(k), although the Home Office reserved the right to do so in future.

Where such an assessment is carried out, paragraph 245DD(l) provides that the Home Office needs to:

make an assessment on the balance of probabilities, and may take into account the following factors: the evidence which the Applicant had submitted; the viability and credibility of the source of money; the credibility of the financial accounts of the business; the credibility of the Applicant’s business activity; the credibility of the job creation; the nature of the business and whether it required mandatory accreditation or insurance; and finally, any other relevant information.

The applicant submitted that the Home Office had failed to apply 245DD(l) and its own guidance and had ignored other evidence on “the viability and credibility of the source of the money, the credibility of the financial accounts and the job creation, for which the Applicant had specifically been awarded points”.

The Home Secretary’s position was that the reference to not considering paragraph 245DD(k) was an error caused by use of a template and again sought to rely on paragraph 245DD(n). On the point regarding failure to consider relevant factors under paragraph 245DD(l), it was argued by the Home Secretary that the rules permitted but did not require those factors to be taken into account.

The third ground for the judicial review was that the decision was irrational and procedurally unfair. This related to the Home Office’s error with the website and the suggestion that the similarity in business names meant that the business was not genuine despite the evidence showing that they were separate entities.

The Home Secretary argued that the judicial review should be dismissed on the basis of the test in section 31(2A) of the Senior Courts Act 1981, namely that it was highly likely that the outcome would not have been substantially different if the conduct complained of in the judicial review had not happened.

The Upper Tribunal upheld the applicant’s challenge on the first ground, holding that the wrong provisions of the rules had been cited (paragraph 48 of Appendix A) and that the Home Office had failed to apply paragraph 245DD(k) along with sub paragraphs (l) and (n).

The applicant also succeeded on the second ground as the tribunal said that the consequence of the template error had been a failure to then refer expressly to the factors in paragraph 245DD(l) as having been considered. The tribunal accepted the Home Secretary’s argument that it was required to consider all of the factors, however did not accept that the Home Office had consciously chosen not to consider them. The error was the failure “to consider that they might be relevant and that there was a discretion to consider and place weight on them at all”.

On the third and final ground, the tribunal held that the process had been procedurally unfair and gave examples including the attempt to blame the applicant for the interviewer writing down the wrong website address and the lack of clarity on what was meant by the allegation that the website lacked “functionality”. The challenge also partially succeeded on perversity grounds because of the website error.

The Upper Tribunal did not consider that the test at section 31(2A) of the 1981 Act had been met as the Home Office had not proven that the decision would not have been substantially different if it had considered whether to exercise the discretion to consider the factors in paragraph 245DD(l).

Conclusion

This is a fact sensitive case, with the tribunal usefully restating the principles set out in the headnote. However this is yet another of those cases where you do wonder why it was fought it to a full hearing given the obvious errors in the initial decision, along with an administrative review decision that made very little sense. No wonder the Home Office spent so much on litigation last year.