Case comment: Hameed (Appendix FM – financial year) [2014] UKUT 00266 (IAC)
For self-employed individuals wishing to bring their partners or other family members to the UK, note should be taken of the recent judgment in the case of Hameed (Appendix FM – financial year) [2014] UKUT 00266 (IAC).
The issue in this case was whether First-tier Tribunal Judge McGavin was right to rely on the sponsor's last two tax returns to determine the average income or whether she should have based her decision by reference to the sponsor's average income over the last two accounting years of the business.
Upper Tribunal Judge Hugh Macleman considered the evidence required under Appendix FM SE for self-employed persons, which are as follows:
"7. In respect of self-employment in the UK as a partner, as a sole trader or in a franchise all of the following must be provided:
(a) Evidence of the amount of tax payable, paid and unpaid for the last full financial year.
(b) The following documents for the last full financial year, or for the last two such years (where those documents show the necessary level of gross income as an average of those two years):
(i) annual self-assessment tax return to HMRC (a copy or print-out); and (ii) Statement of Account (SA300 or SA302).
(c) Proof of registration with HMRC as self-employed if available.
(d) Each partner's Unique Tax Reference Number (UTR) and/or the UTR of the partnership or business.
(e) Where the person holds or held a separate business bank account(s), bank statements for the same 12-month period as the tax return(s).
(f) personal bank statements for the same 12-month period as the tax return(s) showing that the income from self-employment has been paid into an account in the name of the person or in the name of the person and their partner jointly.
(g) Evidence of ongoing self-employment through evidence of payment of Class 2 National Insurance contributions.
(h) One of the following documents must also be submitted:
(i) (aa) If the business is required to produce annual audited accounts, such accounts for the last full financial year; or
(bb) If the business is not required to produce annual audited accounts, unaudited accounts for the last full financial year and an accountant's certificate of confirmation, from an accountant who is a member of a UK Recognised Supervisory Body (as defined in the Companies Act 2006);
(ii) A certificate of VAT registration and the VAT return for the last full financial year (a copy or print-out) confirming the VAT registration number, if turnover is in excess of £79,000 or was in excess of the threshold which applied during the last full financial year;
(iii) Evidence to show appropriate planning permission or local planning authority consent is held to operate the type/class of business at the trading address (where this is a local authority requirement); or
(iv) A franchise agreement signed by both parties.
(i) The document referred to in paragraph 7(h)(iv) must be provided if the organisation is a franchise".
In this case, the appellant could not show the necessary income by averaging the last two tax years as her business did not start until the second half of the tax year. The information from the sponsor's accountants regarding her income for the last two years was relied upon instead.
Upper Tribunal Judge Macleman confirmed that the Immigration Rules could not be constructed in this way and that the financial year for the purposes of Appendix FM was the tax year (in this particular case, the years ending 5 April 2011 and 5 April 2012) and not the year the sponsor selected for accounting purposes. This was because it was the tax return which must show the necessary level of gross income.
The Upper Tribunal therefore found that there was no error of law and dismissed the appellant's appeal.
If you would like further advice regarding the financial requirements under Appendix FM of the Immigration Rules then please contact our immigration barristers on 0203 617 9173 or by email: info@richmondchambers.com.
