How to renew a sponsor licence

Last updated: 15 September 2021

Estimated reading time: 12 minutes

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UK employers wanting to continue to employ overseas workers need to renew their sponsor licence. What should be a straight forward task for UK employers is fraught with the complexities of completing Home Office paperwork correctly. Here’s our guide for businesses on renewing your sponsor licence and when to seek advice from specialist business immigration solicitors

Jump to:

  1. Why should my business renew its sponsor licence?
  2. How difficult is it to renew a sponsor licence?
  3. How do you prepare for a sponsor licence renewal application?
  4. When does a business need to renew its sponsor licence?
  5. What is the sponsor licence renewal application process?
  6. The streamlined sponsor licence renewal application process
  7. The sponsor licence renewal assessment process
  8. What is the sponsor licence renewal fee?
  9. How do you prepare for a Home Office sponsor licence renewal audit?
  10. What happens if a company fails a sponsor licence renewal audit?
  11. Why could my sponsor licence renewal application be refused?
  12. What happens if a company doesn’t apply to renew the sponsor licence?

Why should my business renew its sponsor licence?

A sponsor licence is time limited. Many UK employers see the time limit as unfair as they don’t see why they should have to renew their sponsor licence application. Instead, they think their sponsorship licence should remain in force unless the business asks for the licence to be terminated or the Home Office initiates the revocation of the sponsor licence because the company fails to comply with its sponsor licence reporting and recording duties. Business immigration solicitors have considerable sympathy with that viewpoint, but the immigration rules say if a business doesn’t renew its sponsor licence it can’t continue to employ its existing sponsored workers and can’t recruit additional overseas workers on the Tier 2 skilled worker visa or the intra company transfer visa. 

Some UK business owners may question whether they need to renew their sponsor licence because their current UK recruitment needs are met without transferring employees from an overseas branch of their business to the UK on intra company transfer visas, and without having to employ significant numbers of staff or key personnel on skilled worker visas. However, the supply of EU nationals able to take up employment in the UK free of immigration controls is now restricted, this is due to the end of free movement for EU workers on the 31 December 2020 and the closure of the EU Settlement Scheme on the 30 June 2021. Whilst EU nationals can still come to work in the UK, they require a work visa or a business visa as they are now treated the same as non-EEA nationals, for immigration purposes, unless they have pre-settled status or settled status. For more information on the new immigration rules on employing overseas workers read our article A guide to employing overseas workers

Whilst we all agree that it is a waste of resources to renew a sponsor licence that you don’t need, if the sponsor licence lapses your business will need to apply for a fresh sponsor licence rather than apply for a renewal. If you aren’t sure whether your best option is to renew your sponsor licence speak to our business immigration solicitors for bespoke advice, and our employment solicitors for clarity on the implications of not renewing your sponsor licence on your continued employment of any existing employees. 

How difficult is it to renew a sponsor licence?

Many business owners assume that their HR staff can quickly apply for the renewal of the sponsor licence without needing to spend significant time on the renewal application or requiring the help of business immigration solicitors. However, that isn’t necessarily the case. 

Business immigration solicitors advise business owners that sponsor licence renewal can be straightforward if: 

  • Your business hasn’t encountered any difficulties during announced or unannounced sponsor licence audits. 
  • The sponsor licence hasn’t been suspended during the previous sponsor licence period. 
  • A mock sponsor licence audit has been carried out and no significant issues have been found during the thorough internal audit. 
  • Your sponsor licence has been managed by a professional sponsor licence management service provider, or you have experienced and efficient key personnel in place with established sponsor licence recording and reporting systems that are kept up to date. 
  • Enough time is allowed for preparation of the sponsor licence renewal application, to get any necessary renewal paperwork together and to ensure that the business is ready for a Home Office sponsor licence compliance visit, just in case the renewal application should trigger an audit.

How do you prepare for a sponsor licence renewal application?

How much preparation is required will depend on the nature of your sponsor licence renewal application. But even if your application can be conducted under the streamlined renewal process it is advised to be prepared just in case there is an issue with the application, or a subsequent compliance visit is triggered. 

The clue on how to prepare for a sponsor licence renewal application is in the word ‘prepare’ as preparation is the key to success. Conducting an internal audit or getting your business immigration solicitor to audit your files can seem a daunting task but once you have checked: 

  • Your HR files 
  • Your compliance with sponsor licence reporting and recording duties 
  • The carrying out and review of right to work checks and adherence to the prevention of illegal working legislation 
  •  The training of your key personnel 

You should be ready to prepare your sponsor licence renewal application. If you think that the preparation work is too much trouble, it’s far easier to put the time in before submitting your sponsor licence renewal application rather than trying to challenge a Home Office decision to refuse your sponsor licence renewal application. A good start point for sponsor licence basics is our article ‘Sponsor licence: Guidance for employers’.

When does a business need to renew its sponsor licence?

A sponsor licence is granted for an initial four-year period. If you want to continue to sponsor workers under a Home Office sponsor licence it is important to submit the sponsor licence renewal application before the date of expiry of the previous licence. 

A business with an existing sponsor licence can apply for the renewal of their sponsor licence up to three months before the expiry date. The sponsor licence expiry date is detailed on the summary page of the sponsor management system. 

What is the sponsor licence renewal application process?

A sponsor licence renewal application is submitted online through your sponsor licence management system. It is an obvious point (but often forgotten) that all records, reports and changes to key personnel should be up to date before the online application is submitted. Failure to do so can result in the refusal of the renewal application. 

The sponsor licence renewal application process depends on whether your company qualifies for a streamlined renewal application process or not. The Home Office sponsor renewals guidance for caseworkers states that Home Office officials should only use the streamlined renewal process if: 

  • Your company has successfully renewed your sponsor licence twice before this renewal application. 
  • There are no compliance concerns. 

The Home Office guidance identifies compliance concerns as including but not limited to: 

  • A sponsor licence that is suspended at the date of renewal application. 
  • A sponsor licence holder who is subject to an action plan. 
  • Where a sponsor licence holder is subject to an on-going compliance investigation. 
  • Where a special marker has been placed against a company. For example, because the company has been ordered to pay civil penalties or there are what are referred to as ‘security service concerns’. 

The streamlined sponsor licence renewal application process

If your business qualifies for the streamlined sponsor licence renewal application process the renewal should be quicker and simpler because the Home Office official does not need to carry out the full renewal and checking process comprising: 

  • Company and insolvency checks 
  • Reviewing your certificate of sponsorship usage 
  • Looking at the licence structure 
  • Assessing sponsor management system visit history and any outstanding change requests 
  • Reviewing risk profiles and checking accreditation and registration details and any other trading checks 
  • If necessary, undergoing a compliance visit from a Home Office official 

The sponsor licence renewal assessment process

When the Home Office considers a sponsor licence renewal application on a non-streamlined basis, they will assess the business to see if: 

  • The business is operating legally in the UK 
  • The business remains suitable to sponsor workers 
  • The business is able to meet its reporting and recording duties 
  • The business correctly assigns certificate of sponsorship to sponsored workers 

What is the sponsor licence renewal fee?

The sponsor licence renewal fee depends on the type of sponsor licence your business is seeking and the size of your business. The Home Office immigration and nationality fees can be found on the government website, but the fees are also summarised below: 

Type of sponsor licence Small business or charitable sponsor Medium or large employer 
Tier 2 – skilled worker visa or intra company transfer visa  £536 £1,476 
Tier 5 – temporary worker  £536 £536 

Some company activities mean your company won’t qualify as small. For example, a company that is an authorised insurance company, a banking company, or an e-money issuer. Your company will qualify as small if it is a qualifying company and meets two of the following criteria: 

  • Your company turnover is not more than £10.2 million 
  • The balance sheet total is not more than £5.1 million (this figure is aggregate of the amounts shown as assets in the company balance sheet) 
  • The number of your company employees does not exceed fifty (the number is taken as an average during your financial year) 

A parent company will qualify as a small company if the group headed by it qualifies as a small group, namely it meets two of the above criteria. 

Many entrepreneurs and start-ups are quickly growing their companies. The Home Office guidance says that a company qualifies as small in relation to its first financial year if the qualifying criteria are met in that year. The company will still qualify as small in a subsequent financial year if the qualifying criteria are met in that year. In a subsequent financial year, if on the company balance sheet date, a company meets or stops meeting the qualifying criteria, that will affect its qualification as a small company, but only if it occurs in two consecutive financial years. 

Getting the sponsor licence renewal application fee wrong will delay your sponsor licence renewal. If you are uncertain if your company qualifies as a small company, either because of the nature of its business activity or because of its growth, speak to a business immigration solicitor for detailed advice.  

How do you prepare for a Home Office sponsor licence renewal audit?

Your sponsor licence renewal application may result in a Home Office audit and visit to your premises. Knowing that a renewal audit is a possible outcome of the submission of your sponsor licence renewal application is important as it means that you can prepare for a potential audit before submission of the sponsor licence renewal application. 

If a Home Office audit takes place, the Home Office official may ask to see: 

  • HR records 
  • Sponsored workers for the purposes of interviewing them 
  • Key personnel operating the sponsor licence and sponsor licence management system 

For more guidance on Home Office compliance and renewal visits read our article ‘How to handle a Home Office sponsor compliance visit’

What happens if a company fails a sponsor licence renewal audit?

If the Home Office chooses to conduct an audit as part of your renewal application process and compliance action is recommended your case will be referred to the suspensions and revocation team. The following decisions could be made: 

  • Grant your sponsor licence renewal application but downgrade your sponsor licence from an A-rating to a B-rating 
  • Suspend your sponsor licence and issue an action plan 
  • Revoke your sponsor licence 

If at the time of your sponsor licence renewal application your sponsor licence is B-rated and you are under a sponsorship action plan the Home Office will not make a final decision on your sponsor licence renewal application until the sponsor licence action plan period has expired. 

Why could my sponsor licence renewal application be refused?

It isn’t possible for business immigration solicitors to specify every reason for the refusal of a sponsor licence renewal application, but generally sponsor licence renewal applications are refused where: 

  • The business hasn’t complied with its sponsor licence reporting or recording duties. 
  • The business hasn’t retained correct paperwork or documents on sponsored employee’s HR files. 
  • Sponsor licence key personnel have been changed but the Home Office were not notified of the change. 
  • The business hasn’t complied with right to work checks or with the legislation designed to prevent illegal working. For information on what to do if your business is prosecuted for illegal working read our guide What to do if your business is prosecuted for illegal working
  • The Home Office believes that the vacancies offered to sponsored workers are not genuine, the company has not paid the sponsored worker the minimum salary threshold or has employed them to do a job that is different to that stated on the certificate of sponsorship. 

Many of these errors can be addressed if expert business immigration legal advice is sought at an early enough stage so that any errors are rectified and reported prior to the submission of the sponsor licence renewal application. 

What happens if a company doesn’t apply to renew the sponsor licence?

If you let your sponsor licence lapse by failing to apply to renew it prior to its expiry date then the business will need to either: 

  • Apply for its reinstatement, or 
  • Make a fresh application for a sponsor licence. 

If the business does not act quickly and the sponsor licence expires then you lose your ability to: 

  • Recruit new workers from overseas who are subject to immigration control, and require a sponsoring employer to provide a certificate of sponsorship so they can apply for a skilled worker visa or intra company transfer visa. 
  • Retain your existing sponsored workers. The sponsored workers will have their certificates of sponsorship cancelled and their visas will be curtailed to sixty days (or the time remaining on their work visa if their visa will expire in less than sixty days). During this time, the sponsored worker will need to secure another certificate of sponsorship from an employer with a sponsor licence, switch visa or leave the UK. 

The consequences for not applying to renew your sponsor licence or the application for renewal being refused are therefore potentially very economically damaging to your business and life changing for your sponsored workers and their families. 

If you are a UK based business and need advice on applying for your sponsor licence renewal or if you are concerned about how management aspects of your sponsor licence will affect the success of your sponsor licence renewal application, our business immigration law solicitors can help. 

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