Factual and Procedural Background
These were two joined appeals concerning civil penalties imposed under sections 15–17 of the Immigration, Asylum and Nationality Act 2006 for allegedly employing adults subject to immigration control without a right to work. The appeals concerned Company A, trading as Company A Store, and Appellant B. [1]
Company A was issued penalties totalling £80,000 in respect of two alleged workers. The County Court found that both individuals were employees and dismissed the appeal. [2][3][4]
Appellant B was issued penalties concerning two alleged workers. The Secretary of State later accepted that one had the right to work and withdrew the penalty notice concerning the other after the appeal reached the Court of Appeal, while indicating that a replacement notice would be served. [5][6][7][8]
Shortly before the Court of Appeal hearing, both appellants sought permission to amend their grounds following the Supreme Court’s decision in Akbars Restaurant v Secretary of State for the Home Department. Permission was granted without adjourning the appeals. [9][10][11]
Legal Issues Presented
- Whether permission should be granted to amend the grounds of appeal to rely on the principle established in Akbars. [9][12][11]
- Whether Company A’s penalty notice complied with section 15(6)(a) of the 2006 Act. [13][14]
- What discretion the court possesses under section 17(3) when deciding whether a penalty is too high, including whether it may consider matters outside the 2024 Code. [15][16][17]
- Whether the penalties imposed on Company A and Appellant B were excessive. [15][18][19]
Arguments of the Parties
Appellants’ Arguments
- The appellants submitted that matters outside the 2024 Code could be relevant, including totality, means, culpability, isolated systems failure, genuine attempts to comply, duration and exploitation. They argued that, in appropriate cases, a penalty could be reduced to nil. [20]
- Company A challenged the penalties on the basis that the alleged workers were not its employees and that the penalties were too high. [21]
- Appellant B contended that the alleged worker was providing voluntary assistance rather than working under a contract of service, and alternatively that the penalty was excessive. [22][7]
Respondent’s Arguments
- The Respondent resisted the late amendments, relying on the delay, the lack of explanation, and the possible need for an adjournment. [9][12]
- The Respondent argued that Company A’s penalty notice was valid and enforceable. [10]
- The Respondent submitted that factors outside the 2024 Code were irrelevant and should not be considered, or alternatively that a decision-maker could decline to give them weight unless doing so would be irrational. [23]
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|
| Akbars Restaurant v Secretary of State for the Home Department [2026] UKSC 26; [2026] 1 WLR 3603 | A penalty notice must identify the relevant limb of section 15(1) and comply with section 15(6)(a). | The decision justified allowing the late amendment and guided the assessment of Company A’s notice. [9][11][14] |
| Ashfaq v The Secretary of State for the Home Department [2012] WL 4866907 | Factors outside the Code, including the appellant’s means, may be considered. | The County Court had rejected this approach, but the Court of Appeal’s analysis confirmed that relevant matters outside the Code may be considered. [24][25] |
| Beoco v Alfa Laval [1995] QB 137 | Costs protection may include requiring an amending party to pay costs incurred before amendment where the claim would otherwise have failed. | The case supported granting the late amendments while protecting the Respondent through costs orders. [11] |
| R(J's Supermarket) v Secretary of State for the Home Department [2026] EWCA Civ 1147 | Background concerning the Skilled Worker Scheme. | The Court referred to it when identifying the relevant immigration restrictions applying to the alleged workers. [26] |
| International Transport Roth Gmbh v Secretary of State for the Home Department [2003] QB 728 | A fixed civil-penalty scheme may be penal in nature and disproportionate where it is inflexible and provides no possibility of mitigation. | The case provided context for the development of immigration-related civil penalties and the importance of proportionality. [27][28] |
| Loane Transport v Secretary of State for the Home Department [2004] EWCA Civ 1013 | On a rehearing, the court may consider matters such as the offender’s means and the totality of penalties when deciding whether the amount is too high. | The Court relied on this principle in holding that totality and means may be relevant under section 17(3). [29][30][31] |
| R(Munjaz) v Mersey Care NHS Trust [2005] UKHL 58; [2006] 2 AC 148 | The Respondent relied on an approach limiting consideration to the applicable Code. | The Court distinguished it because section 17(3)(b) expressly requires consideration of other matters the court considers relevant. [23][32] |
| F Howe and Sons (Engineers) Ltd [1999] 2 All ER 249 | The financial consequences of a penalty, including possible business failure, may be relevant, although business failure may be acceptable in serious cases. | The Court referred to this principle when explaining how evidence of means should be assessed. [31] |
Court's Reasoning and Analysis
The amendments were granted despite their extreme lateness and the appellants’ failure to give advance notice. The Supreme Court’s intervening decision represented the applicable law, the validity points could be dealt with shortly, and an adjournment was unnecessary. Costs orders could protect the Respondent. [12][11]
The Court held that a penalty notice must be read together with its statement of case and must identify the applicable limb of section 15(1). Company A’s notice and statement referred to breaches of work restrictions and explained that the alleged workers’ Skilled Worker conditions did not permit the work undertaken. This identified section 15(1)(b)(iii), so the notice was valid. [13][26]
Section 17(3) requires a rehearing, not merely judicial review. The court must have regard both to the 2024 Code and to any other matters it considers relevant. The Code provides the starting point and identifies specified mitigation; the court cannot simply substitute its own starting point or reduce a penalty to nil merely because it would prefer a larger discount. [17][33]
Nevertheless, the Code does not exhaust the potentially relevant considerations. Totality, means, and an effective right-to-work system may, in appropriate cases, bear on culpability and proportionality. A party relying on limited means should provide appropriate financial evidence, such as accounts and information about turnover, profit and remuneration. [25][34]
Company A had produced only one set of unaudited accounts, reporting turnover of £711,179 and pre-tax profit of £31,633. Because the means issue had not been properly explored below, the Court considered it unfair to determine the penalty without a further opportunity for evidence and findings. The penalty issue was therefore remitted to the County Court. [35][36]
As Appellant B’s original penalty notice had been withdrawn and replaced, the penalty issue was relevant only to costs in this appeal. On the evidence before the County Court, there was no basis for reducing the penalty, although the position could differ on a future appeal concerning the replacement notice. [19]
Holding and Implications
Appeals allowed in part. Permission to amend was granted; Appellant B’s appeal was allowed because the original penalty notice had been withdrawn; Company A’s penalty notice was held valid; and Company A’s appeal on quantum was allowed to the extent that the penalty issue was remitted to the County Court. [37]
The decision establishes that the 2024 Code supplies the starting point but does not prevent the court, on a section 17(3) rehearing, considering relevant matters such as totality, means and proportionality. Company A’s penalty remains unresolved pending reconsideration by the County Court, while Appellant B’s withdrawn notice was superseded by a new notice. [17][25][36][37]