Post
by rdjasani » Sat Jun 03, 2017 10:23 am
Update for this case:
we have filed Judicial review application on base of 12 May 2017.
the case claim was on 2 point
ClaIm Point 1)
1) By application failed and issue on 18 April 2017 the application to the challenge the decision dated 19th January to refuse to grant an administrative review
2)Claim Point -2
The ECO reasoned:
‘When asked how much turnover your business in India generated in 2015-2016 you stated July 2015-March 2016 the total turnover was INR4560000. Gross profit was INR150,60,000 and net profit was INR1,230,000. However none of the documents submitted including your Accounting Company "Profits and Loss Charts" for 2015-16 and bank statements submitted for Company XXX , correspond to these figures. I am therefore not satisfied that your business here in India is successful as claimed.’
The ECO is factually mistaken as the figures provided by the Applicant within the supporting documents do correspond with the figures provided by him during the course of interview. This includes those contained within the SARC and Associates letter. Thus the figure the applicant provided in his interview with respect to the turnover of the Indian business was INR4560000 where as that recorded in the accounts was INR4537112. The figure for the net profit given in interview was INR1,230,000 and the figure for net profit recorded in the accounts was INR1,230,942. Those are the figures also contained within the accounts and the letter from Accountant. Whilst the bank statements do not correspond with those exact figures this is explained by the fact that the Indian bank statements submitted were only for the most recent three months preceding the application and not the full year.
Accordingly the only basis provided by the ECO to assert that Applicant’s business in India is not as successful as claimed by the Applicant is misconceived.
The ECO clearly relied upon his/her own error as reason to reject the application and accordingly it cannot properly be sustained
The ECO then reasoned:
‘When asked how much turnover the UK business generated in 2014-2015 you stated 2014 total turnover was £59000 with 20% gross profit on this turnover and 1.88% net profit. For 2015 you stated it was £33000 turnover with a gross profit of 43%. and 9.4% net profit. However I have looked at the XXX Accountants document entitled unaudited accounts and for 01/01/15-31/12/15 gross profit is given as £32,006. This does not correspond to the figures you gave in interview.
It is accepted that the Applicant made an error in stating that the total turnover in 2014 was £59,000 as it was in fact £73,628 and he apologies for this error. It was, however, following an extensive interview, his only error and cannot properly justify the refusal of the application. This is particularly the case given that the ECO is mistaken to assert that the ‘the figures he gave in interview in respect to 2015 do not correspond to those recorded in his accounts.’
Thus the figure given by the Applicant of £33000 does correspond to the actual gross profit being £32006 and he correctly stated that this amounted to a gross profit of 43%. The Applicant is recorded as stating that the net is profit 9.5% when in fact it is 9.4%.
It is contended that ECO’s assertion that the figures provided in the accounts do not ‘correspond to the figures you gave in interview’ is mistake of fact. To the extent that the ECO has relied upon the marginal difference with respect to the figures for 2015 it is contended that such reliance is wholly unreasonable.
‘Additionally you and your investment Partner XXX (NEDE\XXX refers) both state your business is already in premises in XXX . I have looked at the photographs submitted with your application of the premises with very yellow signage (so it would stand out). It appears from the photograph that what has been submitted are signs on a wall marked E7 though, so I have made a check on GoogleStreetview.com of ADDRESS XXX, images of which I have attached to our records. I note from the checks that this shop is nowhere to be seen, despite the fact it would be obvious. I also note the fact that there are more mobile phone parts shops in he building than for any other industry, so customers walking in off the street would have lots of choice.’
If the ECO is asserting that the premises do not actually exist in the location stated by the Applicant then it is contended that the Applicants should be provided with the opportunity to address such a serious allegation. The reliance upon such an assertion, with no opportunity provided to respond, is entirely unreasonable. Contemporaneous evidence of the location of the premises at the location recorded in the application can be provided to respond to these concerns, which have been raised for the first time. The premises is actually located within an ‘arcade’ located at ‘ADDRESS XXX ’ and so cannot be seen from the street. Accordingly the fact that a search of ‘Google Streetview’ did not record its existence cannot justify an assertion that it does not in fact exist.
The reliance upon this as reason to refuse the application is unreasonable
The ECO then appears to be asserting that given the premises is located in an area with ‘more mobile phone parts shops in ADDRESS XXX than for any other industry’ it will be less viable as it will be exposed to greater competition. With respect such reasoning is misconceived and certainly cannot justify rejecting the viability of the application.
Businesses specialising in this area of retail have deliberately chosen to locate in this area on account of the fact that the grouping together of such businesses will attract a greater footfall of customers seeking to purchase such goods. It is contended that the fact that similar businesses will locate in the same area is entirely consistent with other such retailers/service providers with the obvious examples (of which there are many) being Hatton Garden for Jewellers and Harley Street for the medical profession.
The ECO clearly relied upon such reasoning to reject the application and it is contended that s/he was unreasonable to have done so.
The ECO then reasoned as follows:
‘When asked what research you had done about your potential/current customers in the UK you stated you have 3 types of business being retail, wholesale and online sales. For wholesale you said have taken the help of Yell.com to promote business and with online markets like ebay and amazon, but I note there are over 16000 such businesses advertised on Yell.com.
As for growing your business in the face of vast competition, such as Topgift (which I noted from Google Street View is on the same industrial estate as you state is the location of your company), mobile master ltd, RB Mobile and then HK Ltd for wholesale and for online, websites like Mobilefun.co.uk, Amazonco.uk, Ebay and mobilemadhouse.co.uk and Gultek.eu as stated by you, your plan for making your business different from them to gain customers in your own right is regularly advertising offers and schemes better than other companies on a regular basis, offering free delivery to customers ordering in bulk or wholesale, and targeting your customers on Yell.com. As well as that you stated you will participate in International Trade Fairs, put advertisements in business magazines and use online website promotion and deals on social media. You stated you would also target your customer base through sending advertising to mobile numbers and email Ids too which is more than your competition. Finally you stated that your Partner has excellent contacts in China that no one else is aware of so you will be able to undercut your competition in prices which will extract a further customer base. However, this is a highly competitive sector and you state that your main strengths are from variety of product and price but the difference in price for importing from China to the UK is negligible and I do not consider it credible that your competitors in the UK would not be sourcing in a similar way. Your premise that the business will continue to grow is based on the hypothesis that you will heighten the product margin and provide variety. I am not satisfied that your business would grow to the considerable degree that you state it will in your business plan or that you will be able to fund your perceived expansion to the UK company. Nor am I satisfied that your competitors are not advertising in exactly the same was as you suggest are new ideas for your company.’
Essentially it is suggested that this is a highly competitive market with a significant number of businesses operating within it and accordingly it is not credible that the Applicants to be able to succeed in expanding the business following the investment of £200,000.
Such an approach would presumably justify the rejection of any applicant who wished to invest into a business in an established sector. It ignores, however, the very significant growth, as identified in the Business Plan in the mobile phone accessory market which globally had increased from $14 billion in 2012 to $34 billion in 2015. The Business Plan analyses the way in which there is a growing ‘need’ for accessories with a significant increase in demand for Chargers as phones are used for an increasing number of tasks and for protection to the phone and/or screen to prevent damage given the significantly increasing costs of a ‘smart’ phone. This is in addition to an extremely innovative market in which a new product can achieve significantly expand sales in an extremely short period of time such as the ‘selfie stick’. This led a market analyst, John Barton of ‘Bluechipworld’ in Mobile News to state ‘if you look at Tesco, they are constantly wanting to know that we are on the front foot when it comes to suggesting new products, accessories and add ons that will suit their customers…. You have to be thinking about the next thing. One of the reasons we go to factories in HK and China is because you need to keep abreast of what’s coming’. One of those developments is wireless chargers which has been identified as an additional source of growth.
The failure to have regard to such evidence demonstrates a failure to have regard to all of the relevant evidence relevant to the application.
Connected to this it is stated by the ECO as follows:
‘I further note that you state in your business plan that the projected revenue for your business will be £213500 (INR17925900) (FY2017), £335000 (28127300) (FY2018) and £385000 (INR32325400) (FY2019). However, the documents you have submitted do not demonstrate how you have arrived at these figures, particularly when your main plans for increasing sales are using a contact in China that you state is better than anyone else's, advertising in the same places as competitors, and with the current location being amongst an abundance of competitors selling the same items.’ (emphasis added)
The business plan and evidence submitted provides an entirely plausible basis for the projected growth in the Company, as outlined above, and does ‘demonstrate’ how it is anticipate that this will be achieved. Thus, in addition to the way in which the market is evolving, extensive evidence has been provided of the Applicant’s experience of working within the mobile phone industry since April 2014, initially being self employed and then entering into a partnership with XXX. This has involved having successfully established a company in the Indian mobile phone accessories market which is also ‘highly competitive’. It is contended that the evidence of the Applicant having established a successful company in the same sector in which the business he has invested operates and of having the potential to bring to the business the opportunity to use suppliers with whom he has already established contact was clearly relevant to the anticipated increase in turnover.
The ECO is wrong to assert that your main plans for increasing sales are using ‘a contact in China that you state is better than anyone elses.’ (emphasis added) The Applicant did not base this on having ‘a contact’ but identified a number of contacts within China that he has established over a number of years and through a number of visits. Thus, the Applicant provided evidence of his actual business dealings with such suppliers or ‘contacts’ which were identified as a potential source of achieving both improved margins and variety of supply. Within the business plan the intention ‘to import large quantities of a broad range of product from reliable suppliers and manufactures directly from China’ in order to achieve ‘a diversified product line” is explicitly referred to as being fundamental to the future of the company. It was stated that this was particularly relevant, given the analysis of the importance of China set out above, to the development of a range of accessories is the fact that the Applicant has already established an extensive network of suppliers through travel to China.
The ECO asserted that s/he did not consider it the Applicant would be doing anything different to that of his competitors apparently suggesting that the Applicant could not bring anything new. For the reasons outlined above it is contended that the Applicant provided a detailed and entirely plausible explanation as to how the anticipated growth would be achieved.
It is respectfully contended that the failure to have regard to the explanations provided was clearly material to the decision.
To the extent that the conclusion that ‘business here in India is [not as] successful as claimed’ (first reason as considered above) has led to the ECO failing to have any regard to the experience the Applicant has gained then it is contended that this amounts to a mistake of fact.
The ECO then states:
There appears to be a lack of VAT calculations included in the calculations also which you would be required to cover given the sums you project to turn over each year.
The cost of VAT is not included within business plans.
Accordingly the ECO was mistaken to rely upon the absence of VAT costs as reason to reject this evidence.
The ECO then states:
‘You state you will hire three employees, each earning £15000 per annum or £288 per week. You state the job profiles are Website Maintenance, Customer Services and Packaging & Dispatch. In interview I asked you why they would all three be paid the same amount (which I note is the minimum wage for 2016 for 7 hours per day with 30 minutes break as you also stated they would be contracted). You answered because they are all equally important. However, I note someone working in Website maintenance would have an entirely different skills set than the other two roles you want to recruit and therefore would command a different salary.’
The positions may require a different skill set but it is contended that they do not require a different salary. An individual providing website maintenance is not a website developer and is not such a highly skilled position that it will command a significantly higher salary. Even though the position of being a ‘packer’ may require a lower level of skills such an employee must still be paid the minimum wage and accordingly the fact that all three employees have been identified as being paid the same is entirely plausible and cannot properly be relied upon as reason to reject the application.
The ECO then states:
‘I note the figures on your business plan give £10,000 per each of these three employees in Year 1 which equates to below the UK minimum wage for the hours you state they will be required to work.’
The recording of the salary in the business plan for ‘Year One’ commences from November 2016 whereas the Business Plan starts from Jul 16. Accordingly the ECO was mistaken in asserting that the salary within the business plan equates to below the UK minimum wage as it simply reflects the salary that would be paid over a shorter period of time.
It is contended that the ECO was mistaken to rely upon this analysis as reason to reject the application
The ECO then asserts:
‘You also state you will hire three employees, each earning £1,250 a month, being paid the same amount as a Web Designer, Customer Service agent and a packing operative. In total this would mean additional costs to the business of £5,082 a month, £60,984 a year, a business with a current net profit of £6, 668 for 2015. "in my reassessment the figures you project are disproportionate to a company that made a net profit of £6668 in 2015
It is contended that it has reasonably been anticipated that the additional recruitment will increase the profitability of the Company. The Applicant has invested £200,000 by way of Director’s Loan into the business and clearly such funds are a means by which the additional employees may be paid until further profits are generated. Accordingly the ability to incur such additional costs was viable and proportionate.
The ECO then states:
‘in light of the above I am not satisfied that you are sufficiently experienced to run a business. As a result, I am not satisfied that you genuinely intend to invest and establish a business in the UK within the next six months. In line with 245DB(f) of the Immigration Rules, I must be satisfied that you genuinely intend to establish a business in the UK and that you genuinely intend to invest the £200,000 and on the balance of probabilities and following your interview, I am not satisfied that this is the case.’
The ECO has failed to have regard to the fact that the Applicant has already invested the monies in full into the Business.
Further, it is respectfully contended that the ECO has failed to give any reason to assert that the Applicant is not ‘sufficiently experienced to run a business’. His business experience, which has not been challenged, is directly related to the business into which he has invested.
The failure to have any regard to the Applicant’s clear record of success in having established and run a business in India demonstrates a failure to have regard to relevant evidence
To the extent that the ECO has relied upon his/her finding, as detailed above, that his ‘business here in India is [not as] successful as claimed’ (first reason) then this is based upon an error of fact
It is respectfully contended that the ECO has failed to properly consider an entirely bona fide application from a genuine entrepreneur who has already invested significant funds into the business. The reviewer is respectfully requested to review the application and grant entry clearance as a Tier 1 (Entrepreneur)
