Immigration Lawyers’ Guide to Sponsor Licence Audits
Any business with a sponsor licence or planning to obtain one needs to understand sponsor licence compliance and Home Office audits. If they don’t, they risk the loss of their sponsor licence and all the consequences that flow from that.
The Home Office has significantly increased the number of compliance audits and enforcement actions. This means businesses need to follow the rules and be prepared for an audit.
Our UK Immigration Lawyers' guide to sponsor licence compliance provides business owners and key personnel with the information needed to ensure their sponsor licence is compliant.
In this guide, our Immigration Lawyers look at:
- Audit basics
- Compliance basics
- A focus on compliance
- The path to compliance
- Reasons for a Home Office audit
- First licence audits
- Post-licence audits
- Audit location
- Audit timings
- The focus of a post-licence audit
- Audit preparation strategy
- Audit traps
- How the UK Immigration Lawyers at OTS Solicitors can help your business
Audit basics
The Home Office can conduct an audit as part of the initial licence application process or at any stage during the licence's lifetime.
Audits can be arranged in advance or unannounced. There are implications if auditors are turned away, so that isn't a solution for a business that isn't ready to be audited.
Audits don’t just involve the MD, CEO, HR director, or the key personnel. Auditors can ask to interview sponsored employees.
Whilst it may be possible for key personnel to be in a state of preparedness for an unannounced audit, the worry is that not all sponsored employees will understand the importance of the audit process. That’s why the induction process and written office policies and procedures are so important.
Compliance basics
Sponsor licence holders must comply with the law, the immigration rules and Home Office guidance. There are two issues here: the law, immigration rules and guidance are complicated, and they change frequently.
The May 2025 version of Appendix D and reporting and recording duties can be found here.
HR staff and key personnel don’t set out to disobey the rules, but:
- They are often time-poor, juggling responsibilities with the firm’s management taking a fire-fighting approach to sponsor licence management; compliance only becomes the priority it should always be when the firm is at risk of enforcement action.
- They don’t fully understand that the role of the licence holder is that of a gatekeeper or frontline worker, working closely with the Home Office and serving as the Home Office’s ‘eyes and ears on the ground’ to ensure that immigration rules are followed.
A focus on compliance
UK Immigration Solicitors argue that the approach of most companies to sponsor licence compliance must change because the risks of enforcement action are very real.
In the period from April 2024 to March 2025, the Home Office suspended over 1,700 sponsor licences and revoked 1,560 over the same period.
What the Home Office data does not tell us is how many Skilled Worker Visa holders had their Work Visas curtailed because their sponsored employers had their licences revoked, how many overseas workers left the UK because they were unable to switch to a new sponsored employer or a non-sponsored route, or how many businesses folded because they could not continue to operate without a sponsor licence.
The path to compliance
Unfortunately, the immigration rules and Home Office guidance do not clearly outline what sponsor licence applicants or holders need to do. The Home Office provides guidance on what key personnel must report and record, but not on the exact systems and procedures to follow to ensure compliance and pass a Home Office audit.
UK Immigration Lawyers and Employment Solicitors can bridge that gap by translating the information in the immigration rules and Home Office guidance, and then incorporating the key aspects into a business's existing HR practices and written policies.
Immigration Lawyers don’t want to change systems that work for individual companies. At OTS Solicitors, our Employment Lawyers encounter paperless offices and businesses that still operate the way they did 30 years ago. Our mission when we are called in to help with a first sponsor licence application or to resolve compliance issues is not to change your preferred way of working for the sake of change, but to ensure that your business secures its first licence or retains it after an audit.
Reasons for a Home Office audit
The Home Office carry out audits to assess suitability for a first sponsor licence or to check if a business should retain its licence.
A first licence audit can be just as challenging as an audit undertaken when compliance issues are present.
With a new licence audit, Home Office officials are assessing whether the company’s written policies and procedures comply with immigration rules and guidance, and whether these policies are being followed. For example, the carrying out of right-to-work checks and the system to record the need to carry out subsequent checks when an employee is subject to immigration control. During a pre-licence audit, the company will not sponsor employees; however, it may employ workers who are subject to immigration control. For example, employees who are living and working in the UK on a Graduate Visa, a Spouse Visa or working part-time on a Student Visa.
With post-licence audits, an audit may occur after whistleblowing, in conjunction with another regulatory investigation or because the company works in a perceived high-risk sector. Examples of these situations include:
- HMRC investigations, or
- Care home and nursing home businesses, as the care sector is a target for increased Home Office enforcement activity.
First licence audits
If your business is told it needs an audit before its licence application can be processed, you can expect the auditors to address:
- Whether the company is genuine and operating lawfully.
- If there is a real need to sponsor overseas workers.
- If the jobs that will be on offer to overseas migrants meet the Work Visa eligibility criteria, for example, regarding the skills required to do the work or the salary.
- If the company has the systems and policies in place to enable it to comply with Home Office rules and guidance
- Whether the information in the business's sponsor licence application was correct.
Post-licence audits
The focus of an audit conducted after the grant of a licence will depend on the reasons behind the audit. They could be because:
- The firm is merging or acquiring another business or changing its head office.
- A sponsored worker has breached their visa conditions.
- There is a concurrent investigation by another regulatory or licensing body—for example, Environmental Health, the Health and Safety Executive or HMRC.
- The firm is under investigation for potential criminal activity, including money laundering.
- The firm has been fined for employing a worker who does not have the right to work in the UK.
- The sector is under investigation.
The reasons behind the post-licence audit may dictate whether the audit is unannounced or if notice is given. Even where Home Office officials inform key personnel of a planned audit, they rarely provide sufficient time for a company to thoroughly prepare for the audit if systems are not in place or have not been followed for a significant period.
If a company receives notice of a post-licensing audit, it's vital to obtain sponsorship legal advice as quickly as possible so that it can advise on audit preparation and strategy.
Audit location
If the Home Office conducts an unannounced compliance visit, the audit could take place at any location where the sponsored employees work or could work.
Audit timings
Typically, audits last approximately two to three hours. However, the audit may last longer, and key personnel need to make themselves available for the duration of the audit.
If an audit is announced, your company may have a few days or weeks to prepare for it. This isn't long enough if there are systematic failures and non-compliance with the rules, but it may give sufficient time if a company needs to get its house in order before the audit and has the systems in place, even if human errors mean it isn't 100% compliant.
The focus of a post-licence audit
Audit preparation must start with an understanding of what an auditor is likely to consider during their post-licence compliance visit. These three areas will probably be the focus of the visit:
- Sponsor management system compliance and updates to the system.
- Immigration status of employees and checks and systems to establish the right to work.
- Record keeping for sponsored employees, including contact details, absences, salary, and other key information, such as a change to their job title or role.
Many companies focus on preparing their key personnel for a Home Office audit. It is equally important to remember that Home Office officials may request to speak with sponsored employees or with those responsible for staff recruitment as part of their audit.
In some firms, the key contact and Level 1 user may be audit-ready, but the authorising officer, who holds a more senior role in the company and does not have daily involvement in sponsor licence management and the sponsor management system, may not be as familiar with sponsor licence duties. These are all matters that can be picked up quickly by Immigration Solicitors.
Audit preparation strategy
Whether a firm knows it's going to be audited or suspects it's at risk, or thinks the prospects of an audit are remote, it's crucial to have an audit strategy. Ideally, a company will always be audit-ready, but here are five key points if you get short notice of a Home Office compliance visit:
- Ensure key personnel and other key personnel are available – diary commitments may need to be shifted.
- Make sure HR files are accessible and complete. For example, some firms don’t maintain computerised records or experience filing backlogs.
- Check that right-to-work checks have been completed and recorded.
- Warn sponsored employees that auditors may conduct interviews with them.
- Check that sponsored employees are still performing the same jobs as stated on their certificates of sponsorship.
Audit traps
Even if your Level 1 and 2 users are doing an excellent job and their sponsor management system compliance is excellent, the company can still fail an audit. Sometimes it is the small things that companies forget, such as:
- Key personnel often do not realise that they need to retain historical contact details for sponsored employees, not just the current information.
- Sponsored employees may genuinely forget to inform the HR team of a new phone number or address. When interviewed by the auditor, the worker will provide the new information, indicating that the updating of records is not functioning correctly. Firm policy manuals that record the obligations of employees and the disciplinary consequences of non-compliance are necessary, along with routine and regular reminders, such as standard texts or emails to employees.
- Line managers may modify the day-to-day roles and jobs undertaken by sponsored employees without first consulting with HR. In an interview with a Home Office official, a sponsored employee may not realise the significance of the tweaks to their job functions. Their job may no longer fully align with what is stated in the certificate of sponsorship.
- A sponsored employee may not appreciate the significance of how they answer questions about their job role and the work they are asked to do. The company may not have done anything wrong by asking a sponsored employee to step up on one occasion, and the employee may be proud to tell the auditors about how they are valued by the company, which could lead to unnecessary concerns about the accuracy of the certificate of sponsorship.
- Those responsible for recruitment in the company may not appreciate the need to retain evidence to prove that the vacancy was genuine and the recruitment process that led to the appointment of a sponsored worker.
How the UK Immigration Lawyers at OTS Solicitors can help your business
Ideally, our Sponsorship Licence Lawyers prefer to be contacted as early as possible. It makes our job significantly easier, which is beneficial for you and your sponsored employees. However, we don’t live in a perfect world, and our Sponsor Licence Solicitors frequently get calls days before an announced audit or hours after an unannounced compliance visit. We are accustomed to dropping everything to help a business become audit-ready or to address the aftermath of a challenging audit.
If you would like to schedule a consultation to explore how our proactive Business Immigration Lawyers can assist your company, please call us. We can discuss one-off advice, our bespoke Immigration Law Training services, or our Sponsor Licence Management Service.
If you are in the unfortunate position of knowing your licence is at risk of downgrading or revocation, then we can assess your situation and quickly develop a strategy.
We know that our Immigration Solicitors are good at what they do. As testament to that, we get excellent client feedback and referrals from our corporate clients. Our expertise is also recognised by inclusion in the two leading law directories, Legal 500 and Chambers Guide to the Legal Profession.
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