Sponsor compliance changed fundamentally in 2026. The Home Office now cross-checks sponsor records against HMRC payroll data and other government databases. So compliance breaches get detected within days rather than during periodic audits. One missed SMS report can cost you your licence faster than you think. This comprehensive checklist walks through every compliance phase your business must master to survive audits and protect your hiring capacity.
- The Death of Physical Documents: BRPs expired 31 December 2024. Every right-to-work check now happens online through eVisa share codes. Screenshots do not count.
- B2 English Required: From 8 January 2026, all new Skilled Worker applications need B2 level English. Using old B1 tests leads to refusal.
- Salary Thresholds Increased: The general minimum sits at £41,700. Old 2024 codes will trigger CoS rejections.
- Penalties Escalated: Civil penalties start at £45,000 per worker for first breaches, rising to £60,000 for repeats. Licence revocation often follows immediately.
- Digital Enforcement: HMRC and UKVI systems cross-check payroll against visa records automatically. Discrepancies flag within the system before you notice them.
- 10 Day Rule Enforced: Late starts, absences over 10 consecutive days, and resignations must be reported within 10 working days. The system does not accept batch reporting.
If your authorising officer left months ago, your Level 1 user logs in quarterly instead of monthly, or you are still printing BRP copies for files, your next compliance visit will expose these gaps. Ultimately, understanding these sponsor licence compliance 2026 changes protects your ability to hire and keeps your business operational.
Table of Contents
The 2026 Enforcement Landscape
The Home Office now runs sponsor licence compliance 2026 differently. Notably, paper-based checks belong to 2023. In particular, the shift to digital by default means:
- UKVI and HMRC systems talk to each other constantly
- Your payroll data gets cross-checked against SMS reports automatically
- Flags appear before human caseworkers get involved
- Manual catch-up during annual audits no longer works
Consequently, the risk escalated sharply:
- Civil penalties: £45,000 per illegal worker for first breaches
- Repeat breaches: £60,000 per worker within 3 years
- Licence revocation: Typically follows the first civil penalty
- Immediate impact: Sponsored workers lose work permission, recruitment pipeline stops
This checklist exists to prevent that scenario. Firstly, it covers the 6 compliance phases, the reporting deadlines you cannot miss, and the evidence standards that satisfy audits. Moreover, it explains what happens when things go wrong and how to fix problems before the Home Office discovers them.
What Compliance Actually Means – “3 Pillars”
Sponsor licence compliance 2026 is not paperwork. Instead, it is a continuous lifecycle built on 3 core pillars that work together to protect your licence.
1. Prevention
Right-to-work checks happen before employment begins. In essence, these checks create your statutory excuse against civil penalties. Furthermore, they verify that the person holds valid permission to work. Without proper checks, you employ someone illegally from day one, regardless of what their documents say.
2. Monitoring
Once someone starts working, you must track their attendance, verify their role stays consistent with what you sponsored them for, and notice when circumstances change. Clearly, this ongoing monitoring catches problems early. For instance, if a sponsored worker stops turning up, you need to know within 10 days so you can report it. Additionally, you cannot report what you do not track.
3. Reporting
The Sponsorship Management System exists for you to notify the Home Office about changes affecting sponsored workers. Undoubtedly, these reports must happen within strict deadlines. Late reporting counts as non-compliance even when you eventually report correctly. Importantly, the system timestamps everything, and auditors check whether you met the required timeframes.
Why Genuine Sponsors Fail
Most licence suspensions happen to businesses trying to comply properly. Surprisingly, they fail because of silent killers that develop gradually:
Role Drift – You sponsor someone for marketing manager work. Six months later, they spend most of their time on IT support because their tech person left. Essentially, their actual duties no longer match the sponsored role. Unfortunately, nobody noticed until the audit.
Ghost Authorising Officers – The AO listed on your licence left the company 18 months ago. Meanwhile, their name remains on Companies House records, so nobody updated the SMS. During the compliance visit, no one could find the AO.
Calendar Blindness – You lack a system for tracking compliance deadlines. Consequently, resignations get reported late, visa expiries sneak up unnoticed, and file reviews never happen. Over time, problems accumulate silently until an audit exposes them all at once.
These failures are preventable with proper systems. The phases below explain how to build those systems.
Phase 1: Governance and System Setup
Who runs your sponsor licence matters more than most companies realise. Indeed, the Home Office checks this first during audits. They want active, qualified people managing the system, not ghost directors or external consultants.
Your Authorising Officer Must Be Real
The authorising officer must be a paid employee or director of your company with settled status in the UK. That means British citizenship, indefinite leave to remain, or settled status under the EU Settlement Scheme. Moreover, they cannot be consultants working remotely for multiple clients. If your current AO holds a visa themselves, replace them immediately.
Level 1 Users Need Monthly Logins
Someone must log into the SMS monthly at a minimum. Therefore, assign this role to someone who genuinely needs SMS access for their regular duties. Then monitor that they use it. When the Home Office reviews your login history during an audit, dormant accounts raise immediate concerns about who actually manages your compliance.
The Ghost Director Problem
Some businesses list a director as their AO purely because that person has settled status, even though that director works abroad or left years ago. During interviews, auditors ask the AO detailed questions about sponsored workers and recruitment practices. If the AO cannot answer because they do not actually work there, the auditor knows immediately. In most cases, that discovery usually ends with licence revocation.
Build a Compliance Calendar
Create a recurring schedule that prevents deadline blindness:
- Monthly: Level 1 user logs in to SMS, reviews upcoming visa expiries of sponsored workers.
- Quarterly: Review of mock files on 2-3 random sponsored workers.
- Annually: Run refresher training of all the staff who handle sponsored workers.
This calendar turns compliance from reactive scrambling into proactive management.
Phase 2: Pre-Employment Right to Work Checks
Right-to-work checks sit at the heart of sponsor licence compliance 2026. Get them wrong, and you face both civil penalties and licence action. Significantly, the 2026 changes made these checks entirely digital. Physical documents no longer provide protection.
BRPs Expired 31 December 2024
Physical Biometric Residence Permits no longer provide valid right-to-work evidence. If a candidate shows you their BRP, that card is invalid regardless of the visa expiry date printed on it. In other words, using it for your check provides no statutory excuse against penalties. All immigration status now lives in the eVisa system.
The Statutory Excuse: Your Only Defence
The statutory excuse is your only protection against a £45,000 penalty if someone you hire turns out to lack work permission. Creating that excuse requires following the exact steps. Shortcuts invalidate your excuse entirely.
How to Conduct the Right to Work Check
Step 1: Obtain the share code from the worker. This is a 9-character alphanumeric code they generate through their UKVI account. It expires after 90 days.
Step 2: Go to the government’s online checking service. Enter the worker’s date of birth and the share code.
Step 3: Download the PDF profile page showing their status. Do not take screenshots. Do not print what appears on screen. Click the download button and save the actual PDF. Only that PDF provides a statutory excuse.
Step 4: Keep the PDF with the worker’s personnel file. Date it. Record who performed the check and when. That record must stay available for 2 years after the person leaves.
Critical Timing Rule
Complete this check before the person starts work. Not on their first day. Before. If you let someone begin working on Monday morning and complete their check on Monday afternoon, you employed them illegally for those hours. Therefore, schedule checks to finish at least 1 day before the start date, preferably several days earlier, to allow for any problems.
Phase 3: The Genuine Vacancy and Salary Standards
Before you assign a Certificate of Sponsorship, verify the job itself meets requirements. The role needs to be genuine, appropriately skilled, and correctly paid. Otherwise, failures here trigger CoS rejections and damage your compliance record.
RQF Level 6 Means Graduate Level Work
Every Skilled Worker role must meet RQF Level 6 standards. This equals degree-level work in terms of complexity, autonomy, and skill requirements. Job titles alone do not matter. Rather, the actual day-to-day duties must require graduate-level capability. Some companies try to pad job descriptions with complex-sounding tasks to make roles appear skilled.
The Home Office spots this by comparing your description against standard occupational definitions. Unrealistic mixes of senior and junior duties are fraud, not error.
2026 Salary Thresholds Are Higher
The general salary minimum increased to £41,700 annually. Additionally, each occupation code has its own going rate that might exceed the general minimum. You must pay whichever is higher. Check the current salary tables in Appendix Skilled Occupations before every CoS assignment. These update regularly. Remember that salary calculations include guaranteed base pay only. Bonuses, potential overtime, and future raises do not count.
Phase 4: During Employment Monitoring
Compliance does not end once someone starts working. You must track their attendance, monitor their role, and ensure their work pattern stays consistent with what you sponsored them to do. This ongoing monitoring is a critical UKVI sponsor duty.
Attendance Tracking Requirements
You need attendance records for all sponsored workers, even salaried professionals. This does not necessarily mean clocking in and out, but you must document their presence:
- Office workers: Building access logs, meeting attendance, regular manager check-ins
- Remote workers: System login records combined with work output tracking
- Hybrid workers: A combination of physical presence logs and digital activity records
The purpose is simple. If a sponsored worker stops turning up, you must know within 10 days so you can report it. You cannot report what you do not track.
Hybrid Work Address Changes
Many sponsored workers now work hybrid patterns. Perhaps 3 days in office, 2 days at home. That arrangement is fine. However, if that pattern changes to fully remote, you must report it as a change in work address. The rule focuses on where the person actually works primarily. If someone shifts from office-based to working from home in a different city permanently, report within 20 working days.
Role Drift Breaks Compliance
You sponsored someone for a marketing manager role. Six months later, they spent most of their time on IT support because their tech person left. That is role drift. It breaks your sponsor licence duties even when it happens naturally through business needs. If roles change significantly, you must either report the change or assign a new CoS reflecting the actual role. For more information on handling these situations, read our guide to restructuring and role changes.
Phase 5: Reporting Duties and SMS Triggers
Reporting deadlines are strict and unforgiving. The SMS system expects updates within specific timeframes. Missing these SMS reporting deadlines by even 1 day can trigger automatic licence downgrades. Furthermore, you cannot batch report changes at month end. Events must be reported individually as they occur.
The 2 Deadline Rules
1. 10 Working Days: For changes regarding the worker
- Worker fails to start on agreed date
- Worker absent without explanation for 10+ consecutive days
- Worker resigns or is terminated
2. 20 Working Days: For changes regarding the organisation
- Company registered address changes
- Mergers or acquisitions affecting legal entity
- Change of Authorising Officer
Why Each Event Needs Individual Reporting
Some companies collect all their changes during the month, then submit everything on the last working day. This violates the individual deadlines for each event. For instance, if someone resigned on the 5th, you had 10 working days from the 5th to report it. Reporting on the 31st means you missed the deadline by weeks. The SMS flags that as late reporting.
Assign someone to monitor these SMS reporting deadlines weekly. Create a simple tracker showing when events occurred and when reports are due. Automate the reminders if possible.
Phase 6: Record Keeping Under Appendix D
Appendix D sets out exactly what records you must keep for each sponsored worker. These requirements exist so that during compliance visits, you can produce complete files quickly. Auditors typically give you 20 minutes to retrieve records for specific workers.
The Digital Folder System
Create 1 digital folder per sponsored worker containing everything required:
- Current contact details including mobile number and current UK address
- Complete address history for their entire period of sponsorship
- All payslips from start to present
- Signed employment contract showing role, salary, and conditions
- Copy of their right-to-work check showing the PDF profile page
- CoS assignment confirmation
- Any correspondence about role changes, absences, or address updates
Update these folders monthly as new payslips arrive and details change. Do not wait until an audit is announced.
The 20 Minute Test
The auditor walks in unannounced. They select 3 sponsored workers randomly. They ask to see the complete files for those 3 within 20 minutes. If you produce incomplete files, the auditor concludes your systems are inadequate. That finding typically results in at least a downgrade to a B rating. If you cannot produce files at all, expect suspension or revocation.
Therefore, test your system quarterly. Pick 3 random sponsored workers. Note down how long it takes to gather their complete files. If it takes longer than 15 minutes, your system needs improvement.
Managing Internal Pressures
Sponsor licence compliance 2026 often conflicts with business urgency. Managers want roles filled quickly. Directors want immediate start dates. Compliance checks take time and must not be bypassed.
When Leaders Want to Rush Hiring
A director asks for a Monday start on a Thursday. Right-to-work checks are not complete. The response must be firm. Allowing any work before checks are done creates illegal working risk. If identified, this can lead to a £45,000 civil penalty and puts the sponsor licence at risk, affecting all future recruitment. Compliance protects the business; it does not delay it.
Explaining Digital System Delays
Right-to-work checks now involve digital steps. Workers must access UKVI systems and generate share codes. Delays are common. Therefore, set expectations early. Sponsored workers typically need five to seven days between offer acceptance and start date. Build this into hiring timelines.
Building a Compliance Culture
HR compliance cannot sit with HR alone. Line managers must report absences, flag role changes, and track hybrid working. Run short quarterly briefings. Treat repeated failures to report as performance issues. For comprehensive guidance on managing staff schedules and breaks, refer to our guide on rest breaks for 8-hour shifts.
What a Compliance Visit Actually Looks Like
Understanding how compliance visits work helps you prepare effectively. The Home Office does not announce visits in advance. An auditor simply arrives, presents credentials, and begins reviewing your operations immediately.
The Worker Interview
Auditors interview sponsored workers directly, often without management present. They ask questions designed to verify whether the person actually does the job you sponsored them for:
- What does a typical day look like for you?
- Who do you report to?
- What projects are you working on currently?
- Where do you physically work?
- Has your role changed since you started?
The auditor then compares these answers against the job description in the CoS. Significant mismatches suggest either the job description was inflated or the worker is not doing the role they were sponsored for.
The Consistency Cross Check
Auditors compare various sources of data. They may request 3 months’ payslips of chosen workers, bank statements of payment of the same wages, tax records of payment of same wages, and attendance records of same payments. They are looking for inconsistencies. Maybe the payslips indicate 40 hours per week but the attendance records indicate that the individual hardly attended. These inconsistencies create fraud issues.
Self Audit Checklist
Test your readiness quarterly:
- Can you produce complete files for 5 randomly selected workers within 20 minutes?
- Have you reported all resignations and terminations from the past 6 months correctly?
- Do your payroll records match what you reported in SMS for salary and hours?
- Are all current contact details for sponsored workers up to date?
- Has your Level 1 user logged into SMS within the past 30 days?
- Can you verify your AO actually works for your company and has settled status?
If you answer no to any question, fix that gap immediately. To ensure you’re fully prepared, consider using our sponsor licence compliance inspection guide.
If Something Goes Wrong: Consequences and Fixes
Understanding what the Home Office can do and how to respond separates businesses that survive compliance problems from those that lose their licences. Familiarising yourself with UKVI sponsor duties is essential for effective crisis management.
What UKVI Can Do
The Home Office has 4 main enforcement tools, listed from least to most severe:
Action Plan – You receive a formal notice listing specific compliance failures. You must fix them within the timeframe given, usually 28 days. Successfully completing an action plan closes the matter. Failing to complete it leads to downgrade or revocation.
Downgrade to B Rating – Your licence gets downgraded from A to B. This prevents you from using fast track CoS assignment. All CoS assignments require caseworker approval, slowing your recruitment significantly.
Suspension – Your licence is suspended immediately. You cannot assign any new CoS during suspension. Existing sponsored workers remain legal, but you cannot hire anyone new. The Home Office investigates while your recruitment freezes completely. Learn more about common reasons for suspension.
Revocation – Your licence gets revoked permanently. You cannot sponsor anyone. Existing sponsored workers lose their permission to work for you. They must find new sponsors within 60 days or leave the UK. Your business loses the ability to hire from overseas entirely.
What to Do If You Find a Gap
Finding your own compliance problems before the Home Office does is critical. Self reporting demonstrates good faith and typically results in lenient treatment compared to problems discovered during audits.
Assess the severity – Is this a single error in the administration, or is it systematic? Was it illegal working or only late reporting? The way you decide to react depends on the nature of the problem.
Fix it immediately – When a person is working without appropriate checks, then stop his or her work. If the files are not available, prepare them today. Do not wait to see if anyone notices. The more time a problem is on your hands after having learned about it, the worse it appears.
Report it voluntarily – Report to the Home Office on the SMS or email on what you found, what you did to correct it and what you changed to help prevent future occurrences. In their decision-making, voluntary disclosure has a lot of weight.
Document everything – Have a record of when you noticed the problem, what you did about it and when you reported it. This schedule will demonstrate that you did the right thing rather than hiding the issues.
A Note on Civil Penalties
Civil penalties are separate from licence action. You can receive a penalty and still keep your licence, though penalties often can trigger licence reviews. Remember, a gap in right-to-work checks is separate from sponsor duties. If you employ someone illegally, even accidentally, the fine is up to £45,000 per worker (first breach). A repeat breach within 3 years will lead a fine of £60,000 per illegal worker.
These penalties apply even if you genuinely believed the person had permission to work. The only defence is a valid statutory excuse created through proper right-to-work checks.
Practical Tools and Templates
Our compliance team created these tools based on what actually works during Home Office audits. These templates reflect the standards auditors expect and the documentation format that satisfies their requirements.
Free Sponsor Licence Compliance Audit Tool
Not sure whether your current systems would pass a sponsor licence compliance 2026 audit? Use our comprehensive compliance audit tool to assess your sponsor licence readiness. This tool evaluates your governance structure, personnel files, SMS reporting accuracy, and monitoring systems. It identifies gaps before the Home Office does and provides actionable recommendations.
Access the tool here: Sponsor Licence Compliance Audit
Compliance Calendar Template
| Frequency | Task | Responsible Person | Evidence Created |
| Monthly | Level 1 SMS login | HR Manager | Login timestamp |
| Monthly | Check visa expiries for the next 90 days | Compliance Officer | Expiry tracker spreadsheet |
| Quarterly | Mock file audit (3 random workers) | Senior HR | Audit notes and findings |
| Quarterly | Manager briefing on reporting duties | Compliance Officer | Attendance sheet |
| Annually | Full system review and training refresh | Authorising Officer | Training records |
Day Zero Checklist for New Sponsored Workers
Before any sponsored worker begins:
- Right to work check completed using eVisa share code
- PDF profile page downloaded and saved with worker’s name and check date
- Employment contract signed showing correct salary and job code
- Worker’s current UK address recorded
- Worker’s mobile number recorded
- Copy of passport bio page saved
- CoS assignment reference number recorded
- Start date confirmed and recorded in SMS
- Line manager briefed on reporting duties for this worker
- Digital personnel folder created with all documents
Frequently Asked Questions
What are the sponsor licence compliance duties?
They are the set of responsibilities a sponsor must fulfil to keep their licence. They include preventing illegal working, monitoring sponsored workers, reporting changes via SMS, and keeping specific records. For a detailed overview, review our comprehensive sponsor licence duties guide.
What records do we need to keep under Appendix D?
You must keep evidence of right to work, NI numbers, contact details, contracts, pay records, and evidence of the recruitment process. These must be kept for the duration of sponsorship.
What do we do if a sponsored worker does not start?
You must report this on the SMS within 10 working days of the expected start date, explaining the reason for the non-start.
Can UKVI visit unannounced?
Yes. Compliance officers can visit your premises (or interview you digitally) at any time to inspect your HR systems and verify your sponsored workers are genuine.
What evidence do we need to keep to avoid a civil penalty?
You must keep the “Response” (the PDF profile) from the online right-to-work check, or a clear copy of the documents checked (if a manual check is permitted, e.g., for British/Irish citizens), dated prior to employment starting.
Protecting Your Sponsor Licence in 2026
Sponsor licence compliance 2026 shifted from paper checking to digital enforcement. The Home Office now detects problems automatically through system integration. Manual audits happen faster and dig deeper than before. Meanwhile, penalties escalated while tolerance for errors decreased. Protecting your licence requires treating compliance as an ongoing operation, not an annual review.
A Y & J Solicitors is an SRA regulated law firm recognised by Legal 500 for immigration excellence. We have successfully completed over 5,000 immigration applications with a 98% success rate. Our team conducts comprehensive sponsor licence mock audits, identifies compliance gaps before the Home Office does, and prepares your systems to withstand unannounced inspections. Furthermore, we review your SMS reporting accuracy, personnel file completeness, and governance structure.
Get Expert Help
A Y & J Solicitors is an immigration law firm which specialises in Sponsor Licence compliance and HR training. We understand the immigration laws and are result-focused professionals. You can connect with us at +44 20 7404 7933 today for assistance with your visa application or any other UK immigration law concerns. Do not wait for the audit letter. Book a mock audit today and secure your sponsor licence before problems surface. We’re here to help!
