Sponsor Licence Downgrade Guide UK

Sponsor licence compliance is a cornerstone of the UK immigration system. Where an employer fails to meet its sponsorship duties, UK Visas and Immigration (UKVI) can take enforcement action, including downgrading the organisation’s licence rating. A downgrade reduces the sponsor’s ability to recruit overseas talent, imposes strict remedial requirements, and creates significant operational and reputational risks. Understanding how the downgrade process works, its consequences, and the steps required to restore an A-rating is critical for any employer reliant on sponsored workers. This guide explains sponsor licence downgrades, outlines the Home Office action plan process, and sets out best practice measures to minimise risk and maintain compliance.

Section A: Sponsor licence ratings

The Home Office operates a two-tier sponsor licence rating system. When a licence is first approved, it is granted an A-rating, indicating that the organisation has met all sponsorship duties and is trusted to manage immigration compliance. An A-rating confirms that the sponsor has adequate HR systems, trained staff, and the organisational capability to comply with the strict requirements set by UKVI. A-rated sponsors are authorised to assign Certificates of Sponsorship (CoS) to overseas workers and are publicly listed on the Register of Licensed Sponsors.

If UKVI identifies compliance concerns, the licence may be downgraded to a B-rating. A downgrade indicates that breaches of sponsorship duties have occurred but can potentially be remedied. B-rated licences are subject to restrictions and require the sponsor to follow a Home Office action plan at a mandatory cost of £1,579, payable within 10 working days. During the downgrade period, sponsors are prohibited from assigning CoS to new workers. In most cases, the sponsor will be given three months to implement corrective measures or face further enforcement action, including potential revocation.

An exception applies to sponsors under the UK Expansion Worker route within the Global Business Mobility framework. These sponsors may initially hold a provisional licence rating because their Authorising Officer (AO) is based overseas. In such cases, the sponsor is allocated only one CoS for the AO to secure a visa. Once in the UK, the AO can upgrade the licence to an A-rating through the Sponsorship Management System (SMS) and request further CoS as needed.

1. Sponsor licence A rating

An A-rating represents the highest level of sponsor licence status. It confirms that the organisation meets all legal and administrative obligations under the Immigration Rules and sponsor guidance. A-rated sponsors may assign CoS to recruit new overseas workers and continue employing existing sponsored staff without restriction.

To maintain an A-rating, sponsors must:

• Keep complete and accurate records for all sponsored workers.
• Report changes in worker circumstances or company details promptly via the SMS.
• Carry out and document compliant right to work checks for all employees.
• Cooperate fully with UKVI compliance visits and audits.

Failure to maintain these standards can result in a downgrade. Employers are expected to conduct regular reviews of their HR and compliance systems to safeguard their A-rating and avoid costly enforcement action.

2. Sponsor licence B rating

A B-rating is a downgraded status imposed when UKVI identifies non-compliance that can be addressed through remedial action. While downgraded, a sponsor cannot issue CoS to new hires and may only request limited “extension-only” CoS at UKVI’s discretion for existing employees. This temporary status is designed to give the sponsor an opportunity to correct failings through a Home Office action plan.

If downgraded, the sponsor must accept and pay for the action plan within 10 working days. The action plan will specify the areas of non-compliance and the corrective steps required. The sponsor has three months to meet these obligations. Non-payment, refusal, or failure to implement the plan results in automatic licence revocation.

A B-rating therefore represents both a sanction and a warning. It is a public indication on the Register of Licensed Sponsors that an employer has failed to meet its duties, which can damage reputation and workforce planning. Sponsors should treat a downgrade as a critical compliance event requiring immediate senior management attention.

Section B: Sponsor licence downgraded?

A sponsor licence downgrade occurs when UKVI concludes that an employer has not met its sponsorship duties. Downgrades usually follow a compliance visit or investigation in which UKVI identifies weaknesses in HR systems, record-keeping, or reporting. The decision may also be triggered if a sponsor fails to provide requested information or documentation. A downgrade is a serious enforcement measure and places both the organisation and its sponsored workforce under significant pressure.

There are several common compliance failures that lead to a downgrade:

1. Impact on the sponsoring organisation

For the organisation, a B-rating requires acceptance of a time-limited action plan and payment of the £1,579 fee. The action plan outlines specific corrective measures and must be fully implemented within the three-month period. If the sponsor fails to comply or refuses to accept the plan, UKVI will revoke the licence. Revocation means the employer immediately loses its ability to sponsor workers and faces a minimum 12-month cooling-off period before reapplying, with no guarantee of approval.

2. Impact on sponsored workers

For sponsored workers, a downgrade does not usually affect their current immigration status in the short term. They may continue working for the employer, and some may be eligible for visa extensions depending on the terms of the action plan and UKVI’s discretion over extension-only CoS. However, new overseas recruitment must stop until the licence is restored to an A-rating. This can affect workforce planning and create uncertainty for both the employer and its employees.

If the licence is eventually revoked, the consequences for workers are severe. Their visas will be curtailed, usually to 60 calendar days, unless their permission is due to expire sooner. Workers must then either find a new sponsoring employer or leave the UK. For businesses heavily reliant on sponsored staff, this outcome can be highly disruptive, risking client delivery and operations.

Section C: What happens after a sponsor licence downgrade?

When UKVI decides to downgrade a sponsor licence, the organisation will receive formal written notification. This letter explains the reasons for the downgrade and sets out the next steps. In many cases, the sponsor will have been given an opportunity to make representations during the investigation process, but once the downgrade is confirmed, the action plan procedure applies.

The sponsor must accept and pay for the action plan using the Sponsorship Management System (SMS) within 10 working days of the downgrade notice. The mandatory fee is £1,579 and covers UKVI’s costs in preparing and monitoring the plan. Failure to respond within the deadline, or declining to pay, will result in automatic licence revocation.

Options available to a downgraded sponsor

• Accept and pay: The sponsor pays the fee and accepts the action plan. The organisation then has three months to address the issues identified by UKVI. This is the only way to preserve the licence and remain on the Register of Licensed Sponsors.
• Decline and surrender: If the sponsor is not employing any sponsored workers, it can decline the plan, sign the declaration attached to the downgrade notice, and surrender the licence. This must be done within 10 working days. Failure to return the declaration means the licence will be revoked.
• Do nothing or miss the deadline: Ignoring the notice or failing to pay within 10 working days results in automatic revocation.

Repeat downgrades and serious breaches

If a sponsor is downgraded twice within any rolling four-year period, and UKVI finds further compliance failings that would justify another downgrade, the licence will be revoked. In serious cases, UKVI may bypass the downgrade stage altogether and proceed directly to suspension or revocation. This can happen where the sponsor is found to pose a serious threat to immigration control, such as through systematic failings or deliberate non-compliance.

Cooling-off period after revocation

Once a sponsor licence is revoked, the employer cannot reapply for at least 12 months. In cases of repeat or serious breaches, the cooling-off period can be up to 24 months. Any re-application must demonstrate that the organisation has resolved its compliance weaknesses and can fully meet its sponsorship duties. There is no guarantee that a new application will be successful, even after the cooling-off period.

Sponsors should therefore treat a downgrade as a critical warning. Strict deadlines, non-negotiable fees, and the reputational impact of being listed as B-rated all combine to make timely action essential. The downgrade process is designed to test an organisation’s ability to improve and maintain compliance in the long term.

Section D: Sponsor licence Home Office action plans

An action plan is the formal mechanism by which UKVI gives a downgraded sponsor the opportunity to correct identified compliance failings. It is issued when UKVI considers that the breaches are remediable and do not yet warrant immediate suspension or revocation. The plan sets out specific corrective measures that must be completed within three months. The sponsor must pay the £1,579 fee and accept the plan within 10 working days of the downgrade notice.

Failure to pay or accept the plan within the deadline results in revocation. Similarly, if the sponsor is unwilling or unable to implement the measures required, UKVI will revoke the licence. For this reason, sponsors should only accept an action plan if they are confident that the necessary improvements can be made within the timeframe.

Scope and requirements of an action plan

The contents of an action plan vary depending on the compliance failures identified. Typical requirements include:

• Improving record-keeping systems to ensure files comply with Appendix D of the sponsor guidance.
• Enhancing oversight of staff authorised to assign Certificates of Sponsorship (CoS).
• Strengthening processes for reporting worker absences and job changes through the Sponsorship Management System (SMS).
• Improving communication and compliance monitoring across multiple business sites.

At the end of the three-month action plan period, UKVI will conduct follow-up checks to determine whether the measures have been implemented. The possible outcomes are:

• Licence restored to A-rating: where all measures have been implemented and UKVI has no further concerns.
• Second action plan issued: where new or additional compliance concerns are identified that can be addressed with further remedial action. A new £1,579 fee will apply.
• Licence revoked: where the sponsor has failed to comply with the plan or where more serious breaches come to light.

Special provisions for Expansion Worker sponsors

Sponsors holding a provisional licence under the UK Expansion Worker route cannot be downgraded to a B-rating. If such a sponsor fails to meet its duties, the Home Office will consider immediate revocation instead of issuing an action plan. This reflects the limited scope of provisional licences, which exist to allow the Authorising Officer to enter the UK and establish the business before a full licence is granted.

The action plan process is designed to encourage sponsors to take compliance seriously. It allows time for corrective action but operates within strict deadlines and with clear financial and operational consequences. Employers should treat the period as an intensive compliance exercise, requiring cross-departmental coordination and senior management oversight.

Section E: How to avoid a sponsor licence downgrade

Avoiding a downgrade requires proactive management of sponsorship duties. The Immigration Rules and sponsor guidance impose detailed obligations on licence holders. Even minor lapses, such as late reporting or incomplete records, can be treated by UKVI as systemic failings. Employers must therefore establish strong HR processes and compliance frameworks that operate consistently across the organisation.

Core sponsorship duties

Every sponsor is expected to meet the following duties on an ongoing basis:

• Reporting duties: All changes in worker circumstances (such as job role, salary, or work location) and relevant business changes must be reported via the Sponsorship Management System (SMS) within strict deadlines.
• Record-keeping: Employers must maintain worker files in line with Appendix D of the sponsor guidance. These include copies of right to work documents, employment contracts, contact details, salary records, and absence monitoring.
• Right to work checks: Employers must conduct prescribed checks for all employees, not just sponsored workers, and keep evidence on file. Correct checks provide a statutory excuse against civil penalties.
• HR systems: Sponsors must have reliable systems to track attendance, role changes, salary compliance, and visa expiry dates. Weak or inconsistent processes are a common trigger for downgrades.
• Cooperation with UKVI: Sponsors must respond promptly to requests for information and prepare for unannounced compliance visits. Failure to cooperate can result in immediate suspension or revocation.

Best practice for sponsors

To minimise the risk of a downgrade, sponsors should:

• Conduct regular internal audits to identify gaps in record-keeping or reporting.
• Arrange mock compliance visits, either internally or with external specialists, to test HR systems and readiness for UKVI inspections.
• Provide ongoing training for HR staff and Authorising Officers on changes to the Immigration Rules and sponsor guidance.
• Ensure senior management oversight of sponsorship activities, recognising that compliance is a business-critical responsibility.
• Review policies and processes after any organisational changes, such as mergers or restructuring, to confirm they remain compliant.

Proactive compliance reduces the likelihood of a downgrade and supports smooth workforce planning. It also reassures sponsored workers that their immigration status is secure, which is essential for retention and morale. Given the complexity of the rules and the frequency of updates, many employers choose to obtain specialist legal advice to ensure their compliance frameworks remain up to date and fit for purpose.

Section F: Summary

Managing a sponsor licence is an ongoing obligation that requires vigilance, resources, and robust HR systems. A downgrade from an A-rating to a B-rating is far more than an administrative change. It removes the ability to recruit new overseas talent, places strict time limits on remedial action, and exposes the organisation to reputational damage. Employers must pay a non-negotiable action plan fee of £1,579, commit to implementing corrective measures within three months, and prepare for further UKVI scrutiny.

If the action plan is not completed on time or repeat failings occur, the licence may be revoked. Revocation not only prevents the employer from sponsoring workers but also places existing employees’ immigration status at risk, potentially leading to curtailment of their visas. The business will then face a mandatory cooling-off period of at least 12 months, and possibly up to 24 months, before reapplying for a licence, with no guarantee of success.

For employers who rely on international recruitment, these risks can severely disrupt workforce planning and service delivery. The only sustainable way to mitigate them is to embed compliance into everyday processes, supported by regular audits, effective training, and senior oversight. A proactive and consistent approach to sponsorship duties ensures that an organisation can retain its A-rating and continue to recruit and retain the overseas talent it needs.

Section G: Need assistance?

Sponsor licence downgrades create immediate and significant compliance challenges. Employers must respond quickly to protect their ability to sponsor workers and avoid escalation to licence revocation. Given the complexity of the Immigration Rules and the prescriptive nature of Home Office action plans, many organisations benefit from external legal or compliance support when facing enforcement action.

Specialist advisers can assist with:

• Assessing the downgrade notice and preparing representations within the deadlines.
• Interpreting and implementing the requirements of the Home Office action plan.
• Carrying out audits of HR and compliance systems to address weaknesses.
• Training HR teams and Authorising Officers on sponsor duties and SMS management.
• Developing long-term compliance strategies to avoid repeat downgrades.

Independent advice can make the difference between regaining an A-rating or losing the ability to sponsor workers altogether. For organisations dependent on international recruitment, swift and informed action is vital.

Section H: Sponsor licence downgrade FAQs

What is a sponsor licence downgrade?

A sponsor licence downgrade occurs when UKVI reduces an employer’s licence rating from A to B due to non-compliance with sponsorship duties. The downgrade signals that remedial action is required before the employer can regain full sponsorship privileges.

Why would a sponsor licence be downgraded?

A downgrade may result from record-keeping failures, late or missing reports of changes to sponsored workers, weaknesses in HR systems, or failure to cooperate with UKVI requests. Downgrades often follow compliance visits where such issues are identified.

What happens if a sponsor licence is downgraded?

The sponsor will be issued with an action plan and required to pay a fee of £1,579 within 10 working days. During the downgrade, the organisation cannot sponsor new workers and must complete corrective actions within three months to restore its A-rating.

Can an employer continue sponsoring existing workers with a downgraded licence?

Yes. Employers may continue employing existing sponsored staff. In some cases, UKVI may permit “extension-only” Certificates of Sponsorship, but no new hires can be sponsored until the A-rating is restored.

How long does an employer have to regain an A-rating?

Most action plans allow three months to implement corrective measures. Failure to comply within this timeframe can lead to licence revocation.

How much does it cost to follow an action plan?

The Home Office charges £1,579 for an action plan. This fee is mandatory and non-refundable, even if the sponsor subsequently loses its licence.

Can a sponsor licence be reinstated after revocation?

If UKVI revokes a licence, the employer must wait a minimum of 12 months before reapplying. In cases of repeat or severe breaches, the cooling-off period can be up to 24 months. Re-approval is not guaranteed.

How can employers avoid a sponsor licence downgrade?

Employers should maintain strong HR and compliance systems, carry out regular audits, and provide staff training on sponsorship duties. Proactive management of right to work checks, record-keeping, and reporting obligations reduces the risk of enforcement action.

Section I: Glossary

Section J: Additional resources and links