Securing a Sponsor Licence: A Guide for Start-Ups and New Businesses
The process by which a business obtains a licence from the Home Office to sponsor migrant workers is, at its core, the same for all organisations – whether the business is large and well-established, or is a new company that is not yet trading and does not have any employees.
In practice, however, there are a number of considerations that new businesses must always bear in mind. New businesses should not be deterred from making Sponsor Licence applications, but should take extra care in relation to the matters below, to ensure that they do not prove to be stumbling blocks in an application.
Obtaining a Sponsor Licence: Considerations for New Businesses
Is Your New Business a Genuine Operation?
To grant a Sponsor Licence, the Home Office must be satisfied that a business is “a genuine organisation operating lawfully in the UK”. It is important to note that this does not necessarily require that the business has commenced trading. Our barristers have successfully assisted many small businesses in obtaining Sponsor Licences even when they are not yet trading or generating revenue – this might be for a variety of reasons, including situations where a business cannot feasibly commence trading until the sponsored migrant has arrived in the UK, or businesses developing a product that is yet to go to market.
However, in these sorts of situations, a business must be careful and thorough in how it goes about demonstrating that it is “a genuine organisation operating lawfully in the UK”. In theory, a business proves that this requirement is met by providing documentation listed in Appendix A of the Home Office’s Sponsor Licence guidance. In reality though, this may not be enough. The Home Office decision-makers considering the application will need to be satisfied that the business is genuinely capable of offering skilled employment, genuinely capable of paying the sponsored migrants’ salaries, and is not merely a sham set up to facilitate migration to the UK.
For that reason, we always recommend that new businesses go well beyond the documentation listed in Appendix A in showing genuineness. Providing a detailed business plan is often a helpful start – we often have detailed discussions with our clients as to what further evidence is sensible to provide.
Is Your New Business Capable of Complying With Its Sponsor Duties?
Businesses must not only be genuine operations to hold a Sponsor Licence, but must also be capable of carrying the duties required of them as sponsors. The Home Office’s guidance states, “we judge this by looking at your current human resources and recruitment practices to make sure you will be able to fulfil your sponsor duties, and we may conduct a compliance check on you before your licence is granted”.
Larger organisations may have an established HR department, and may be able to evidence a history of consistent recruitment practices and good record-keeping. For newer and smaller businesses, proving their capability of complying with sponsor duties may be more difficult. Indeed, for companies that do not anticipate having more than a few employees, they may not expect to ever need specialist HR professionals or software, and their recruitment processes might be ad hoc and somewhat informal.
For a small or new business, complying with sponsor duties need not be especially onerous or daunting. However, it is absolutely essential that the duties are properly understood and complied with – and that the company can demonstrate that it has suitable systems in place at the time of application. When instructed to prepare Sponsor Licence applications, we provide clients with a tailored HR policy and procedure package to help them understand the sponsor duties, implement systems that are compliant, and make sure that the company’s key personnel are well-equipped to handle any compliance check.
Does Your New Business Have a Corporate Bank Account?
Whilst for many businesses, there is some choice as to which documents from Appendix A they provide in support of their Sponsor Licence application, for start-ups, it is mandatory to provide evidence of having a current, corporate bank account. A start-up, for this purpose, is defined as an entity that has been operating or trading in the UK for less than 18 months on the date of the Sponsor Licence application.
A business bank account must be with a bank that is regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK. It is worth noting that this excludes many e-money institutions, such as Revolut (which holds a banking licence for the European Economic Area but not for the UK).
We cannot advise on the process of opening a business bank account, but our experience from clients is that it can often be subject to delays, particularly where some or all of the company’s directors are based outside the UK. For this reason, it is usually sensible to make opening an account an early priority if the company does not have one already.
Does Your New Business Have Personnel Who Can Manage the Licence?
When a Sponsor Licence application is submitted, a business needs to nominate members of its staff as “Key Personnel” to carry out particular roles in relation to the licence. All of the Key Personnel must meet a number of specific requirements – for example, each must be a paid member of your staff or engaged by you as an ‘office holder’ (subject to various exceptions); each must be based in the UK (unless on the UK Expansion Worker route); and they must not have any unspent criminal convictions. There are additional requirements specific to the individual roles – for example, the Authorising Officer must be “the most senior person in your organisation responsible for the recruitment of all migrant workers and ensuring that you meet all of your sponsor duties”, whilst the first Level 1 User must be an employee, partner, or director.
In a new or small business, where in some cases there may not be any employees other than the sponsored migrant (for example, in a “self-sponsorship” situation), there may not be an obvious person to appoint to each of the Key Personnel roles. However, it is an absolute prerequisite for a successful application that you identify suitable individuals to fill these roles. If necessary, you may need to consider whether to bring additional members of staff into the business, whether as payrolled employees, or in office holder positions such as partners or directors.
Contact our Immigration Barristers
Obtaining a Sponsor Licence as a new business is perfectly possible, and companies should not be deterred from applying simply because they may not yet be generating revenue or employing other staff members. However, in such circumstances, applications often require a little more care to demonstrate to the Home Office that business should be granted a licence. For expert advice and assistance in relation to a Sponsor Licence application, contact our Immigration Barristers on 0203 617 9173 or complete our enquiry form below.
