For UK businesses that rely on overseas talent, holding a valid sponsor licence is essential. It’s what allows employers to legally hire workers from outside the UK under the points-based immigration system. But maintaining this licence isn’t just about filling in forms or keeping it up to date – it comes with a set of ongoing responsibilities. If these are not met, the Home Office can take action, including downgrading the sponsor licence.
A downgrade is a formal warning that the sponsor has failed to comply with its duties. It doesn’t mean the licence is revoked – but it signals that the business is under increased scrutiny and must take immediate steps to improve. Understanding what this downgrade means, why it happens and how to respond is crucial for any business employing sponsored workers.
What does a Sponsor Licence downgrade mean?
The Home Office assigns one of two ratings to each sponsor licence – an A-rating or a B-rating. An A-rating is given to organisations that meet all sponsor duties and maintain a good compliance record. It’s the rating assigned when a licence is first granted, and it allows sponsors to issue Certificates of Sponsorship (CoS) and continue sponsoring workers without restriction.
A downgrade occurs when the Home Office lowers the licence rating from A to B. This change happens after an audit or compliance check reveals that the sponsor has failed to meet the requirements of the sponsor licence. A B-rating means the business can continue sponsoring existing workers but cannot assign new CoS unless the issues are resolved and the rating is upgraded again.
The downgrade is not permanent – but it is serious. It shows that the Home Office is no longer confident in the sponsor’s ability to comply with immigration rules and action is required to restore that trust.
Why might a sponsor licence be downgraded?
There are several reasons a sponsor licence might be downgraded, most of which stem from a failure to comply with the duties outlined in the Home Office guidance. These duties include keeping accurate records of sponsored workers, reporting certain events (such as a change in job role or salary) and ensuring that only eligible individuals are sponsored for roles that meet visa criteria.
Common compliance issues include:
- Failing to report changes within the required time frame
- Poor record-keeping, such as missing contact details or employment history
- Allowing sponsored workers to work in unapproved roles or locations
- Employing individuals who no longer have valid immigration status
In some cases, a downgrade follows an unannounced compliance visit, where Home Office officers find discrepancies between what the sponsor reported and what’s actually happening on the ground. Even if unintentional, these breaches can lead to a loss of trust and trigger a downgrade.
What happens after your licence is downgraded?
Once a sponsor licence is downgraded, the Home Office will issue an official notice confirming the change in rating. Alongside this, the sponsor will receive an action plan outlining the compliance failures and what must be done to fix them. This action plan is mandatory and must be purchased from the Home Office at a cost of £1,476.
From that point on, the sponsor must follow the steps outlined in the action plan and demonstrate meaningful improvements within a strict time frame – typically three months. During this period, the sponsor cannot issue new CoS, which may impact recruitment plans and put pressure on existing operations.
If the sponsor fails to comply with the action plan or makes further errors during this period, the licence may be revoked entirely. This would mean that all sponsored workers lose their permission to work, and the business could face civil penalties or reputational damage.
Can you return to an A-rating?
Yes, but only if the Home Office is satisfied that you’ve fully addressed the issues outlined in the action plan. Successfully regaining an A-rating means your business can resume assigning Certificates of Sponsorship and proceed with overseas recruitment as before.
However, this isn’t automatic. The Home Office will want clear evidence of structural and operational changes – not just promises of future compliance. This may include new HR policies, audit trails, updated personnel records and regular internal checks to ensure continued adherence to sponsor obligations.
If you fail to meet the conditions of the action plan, the downgrade will remain – or worse, the licence may be revoked entirely. That’s why it’s vital to take the downgrade seriously from day one and, where possible, seek legal guidance.
Avoiding downgrades in the future
The best way to avoid a downgrade is to build a strong internal compliance culture. This starts with ensuring that key personnel – especially Level 1 and Level 2 users – understand their responsibilities. Regular internal audits, timely reporting and thorough record-keeping are all essential.
It’s also a good idea to conduct periodic mock compliance checks to identify gaps before the Home Office does. For companies sponsoring multiple workers, having robust HR and legal oversight is critical to maintaining a clean record.
Self-auditing processes can also be especially valuable for businesses using the self-sponsorship visa route, where the business owner sponsors themselves through their own UK company. These cases can attract additional scrutiny so ensuring full compliance with sponsor duties is even more important in those scenarios.
Need help with a downgraded sponsor licence?
If your business has received notice of a sponsor licence downgrade, acting quickly and strategically is essential. At Osbourne Pinner Solicitors, we offer tailored advice for employers navigating sponsor compliance issues. From reviewing your action plan to guiding you through an appeal or upgrade application, our immigration lawyers provide the legal support you need to get back on track.
We also help businesses applying for new sponsor licences, handling sponsorship of overseas workers and resolving issues related to the Skilled Worker, Global Business Mobility and self-sponsorship visa routes.
We offer a free 30-minute consultation to assess your situation and recommend next steps. Contact us today via the form below, call 0203 983 508 or email [email protected] to speak with one of our experienced immigration solicitors.
You can come to our offices in Harrow, Canary Wharf, Piccadilly Circus or Manchester – or speak to us on a video call if you’d prefer a remote consultation.
