Section A: Sponsor licence ratings
The Home Office categorises sponsor licences with either A- or B-ratings. Having first been approved for a sponsor licence, each licence is granted an A-rating.
An A-rated licence means that the sponsoring organisation has the necessary systems and people in place to meet its sponsor duties, and is trusted to act in a way appropriate to those approved by the Home Office for licensing. On approval of its licence, an organisation will be added to the register of licensed sponsors, and will be allowed to assign CoS to workers that the organisation is looking to recruit under a sponsored work route.
The Home Office has powers to take action for non-compliance against sponsor licence holders that fail to discharge their sponsorship duties, including downgrading the sponsor licence rating from an A-rating to a B-rating.
| Feature | A-Rating | B-Rating |
|---|---|---|
| Ability to sponsor new workers | Yes | No |
| Assign Certificates of Sponsorship | Full allocation based on demand | Limited or zero, extension-only at UKVI discretion |
| Licence status on Register of Sponsors | Publicly listed as A-rated | Publicly listed as B-rated |
| Action plan required | No | Yes (£1,579 fee, 3 months to comply) |
| Risk of revocation | Only if serious breach | If action plan not met or repeat downgrade |
The only exception to this rule is in relation to a licence to sponsor migrant workers on the UK Expansion Worker route under the Global Business Mobility umbrella. In this context, where the person named in the application as the Authorising Officer (AO) is overseas, the sponsor will be given a provisional licence rating and assigned just one Certificate of Sponsorship (CoS), which must be issued in the AO’s name so they can apply for a visa to enter the UK. Having been granted entry clearance, the AO can upgrade the licence to an A-rating and request additional CoS using the Sponsorship Management System (SMS).
1. Sponsor licence A rating
An A-rating for a sponsor licence is the highest rating granted by UK Visas and Immigration (UKVI) to UK employers who meet all their sponsorship duties and comply with immigration rules. It confirms that an organisation is fully compliant and trusted to sponsor skilled workers from overseas.
A-rated sponsors can assign Certificates of Sponsorship (CoS) to foreign workers and continue to employ existing sponsored employees without restrictions. This status appears on the Register of Licensed Sponsors, which lists approved employers authorised to hire workers under the Skilled Worker and other sponsored visa routes.
To maintain an A-rating, employers must:
- Keep accurate and up-to-date records of sponsored workers.
- Report any changes in employment status or worker details through the SMS.
- Conduct right to work checks to ensure employees have valid immigration status.
- Cooperate with UKVI audits and site visits.
If an employer fails to meet compliance requirements, their licence may be downgraded to a B-rating, requiring them to follow a UKVI action plan to restore their A-rating. Employers should regularly review their sponsorship duties to avoid penalties and ensure they retain their A-rated status.
2. Sponsor licence B rating
A Sponsor Licence B-rating is a downgraded status for UK employers holding a Home Office sponsor licence, indicating breaches that UKVI considers can be corrected through an action plan, rather than requiring immediate suspension or revocation.
Unlike an A-rating, which allows full sponsorship privileges, a B-rating imposes restrictions and requires corrective action to avoid further penalties, like suspension or revocation. This is governed by the “Workers and Temporary Workers: Guidance for Sponsors – Part 3: Sponsor Duties and Compliance”.
Practically speaking, if you receive a B-rating, the Home Office will notify you, detailing breaches. You will be issued an action plan, costing £1,579, which outlines steps to fix the specific issues within a fixed 3-month period. You will need to pay and accept the plan via the SMS within 10 working days, or risk licence revocation.
While B-rated, you cannot sponsor new workers, add branches or assign new CoS. You may be able to extend existing workers, but UKVI will decide in the action plan how many extension‑only CoS are permitted. Your CoS allocation therefore drops to zero or minimal, potentially impacting recruitment.
DavidsonMorris Strategic Insight
All sponsors start anew with an A rating. When you’re granted a licence, you are deemed to meet the required standards. However, A rating is fragile and requires management to safeguard this status. A licence downgrade is a public statement by the Home Office that your systems are inadequate. It’s the first step on the penalty ladder, and once you’re on, you’re facing mounting costs and resource drain as you either do the remedial work to reinstate the licence, or you lose it.
Section B: Sponsor licence downgraded?
Sponsors are required under the Immigration Rules and Home Office guidance to meet compliance duties. There are a number of scenarios in which a licence may be downgraded. This could be, for example, if the Home Office believes that a sponsor no longer has the necessary processes in place to comply with its sponsor duties, typically following a post-licence compliance visit. A downgrade decision can also be made where the Home Office has asked for information held by the organisation but the sponsor has failed to comply with that request.
There are a number of implications that can arise from a sponsor licence downgrade, including for both the sponsoring organisation and for its sponsored workers.
| Compliance Failure | Example | Risk to Employer |
|---|---|---|
| Record-keeping gaps | Missing proof of right to work | Downgrade, action plan, reputational risk |
| Reporting failures | Not notifying UKVI of job changes | CoS misuse, licence at risk |
| Poor HR controls | Inconsistent attendance monitoring | Licence downgrade or revocation |
| Failure to cooperate | Ignoring UKVI information requests | Direct revocation |
1. For the sponsoring organisation
If a sponsoring organisation is downgraded to a B-rating, it must meet a time-limited action plan for which it is liable to pay a fee. This plan will set out the steps that need to be taken to regain an A-rating, where the Home Office can revoke the licence if the sponsor fails to comply with the action plan or make the necessary improvements in the time provided.
2. For the sponsored workers
The sponsor can continue to employ any existing sponsored workers, and will be able to issue CoS to those looking to extend their permission to stay in the UK. UKVI will decide in the action plan how many extension‑only CoS the sponsor may have. UKVI usually reduces the CoS allocation to zero or minimal, and extension-only CoS are permitted only at UKVI’s discretion. Employers should not assume automatic entitlement to extensions. However, the sponsor will not be able sponsor new migrant workers until improvements have been made and its licence rating reinstated, where overseas recruitment must be put on hold until then.
Existing sponsored workers are usually unaffected in the short term, but their visa renewal depends on the sponsor maintaining its licence. In the event that the licence is subsequently revoked for failure to comply with an action plan, this will put the livelihoods of any existing workers at risk, where, unless they can find an alternative and suitable sponsor, their leave will be curtailed.
Section C: What happens after a sponsor licence downgrade?
When a licence rating is being downgraded, the Home Office will write to the sponsor to explain what action is proposed and why. If after representations UKVI proceeds, the downgrade takes effect and the action plan must then be accepted/paid within 10 working days.
Where the Home Office proceeds with sponsor licence downgrade, it will request payment of £1,579 from the sponsor. This fee covers the cost of preparing and supervising the action plan.
The next steps therefore are to either:
- Accept and pay: to continue to be a licensed sponsor, the fee must be paid within 10 working days using the ‘Action plan details’ function in the sponsor’s SMS account.
- Decline and surrender: if no workers are currently being sponsored, the sponsor can choose to surrender its licence by selecting the ‘decline’ option in the ‘Action plan payments’ function in its SMS account. The sponsor must also sign the declaration attached to the downgrade decision letter and return this within 10 working days. If the sponsor selects ‘decline’ in the SMS but does not return the signed declaration to surrender its licence within 10 working days, the Home Office will revoke its licence.
- Do nothing or miss the deadline: if the sponsor simply ignores the notification sent from the Home Office of its sponsor licence downgrade and/or does not pay the action plan fee within the 10 working days allowed for payment, the Home Office will revoke the licence.
If a sponsor is downgraded to B-rating and subject to an action plan twice in any rolling 4‑year period in which the licence is held, and the Home Office discovers that the sponsor again meets the criteria to be downgraded, the licence will be revoked. In serious cases, a sponsor may not even be given the opportunity to rectify any initial areas of concern, where the Home Office reserves the right to suspend or immediately revoke a licence without first downgrading it. This could be where, for example, there has been a significant or systematic failing, and the sponsor is deemed by the Home Office to pose a serious threat to immigration control.
If the licence is immediately revoked, or revoked following either a first or second action plan, there is no right of appeal, although the sponsoring organisation can re-apply for a licence. However, there will be at least a 12-month cooling-off period before being able to re-apply (up to 24 months in cases of repeated or severe breaches), and without any guarantee that any new application will be approved. On re-applying, the sponsor must be able to show that it is capable of discharging its sponsorship duties.
| Aspect | Downgrade to B | Revocation |
|---|---|---|
| Ability to sponsor new workers | No | No |
| Ability to continue employing existing sponsored workers | Yes | No, visas curtailed |
| Chance to regain A-rating | Yes, via action plan | No, must reapply after cooling-off |
| Cooling-off period | None if restored | 12–24 months |
DavidsonMorris Strategic Insight
If you’re facing a sponsor licence downgrade, you’ll need to act quickly. You’ll only be given 20 working days to put your case forward in a formal response, and then just 10 working days to accept and pay for the action plan. There is no right to appeal a licence downgrade.
Prepare for it to be all hands on deck and significant resource drain to devise the response strategy and action all necessary changes. If you miss one single deadline, you’ll be facing an automatic licence revocation, which is potentially catastrophic for the business.
DavidsonMorris Strategic Insight
Home Office actions are highly prescriptive and demanding on the sponsors. The Home Office is testing your appetite and capability to reinstate sponsorship compliance. The 3-month review is used to assess the longevity of your remedial actions; have you stuck to the plan and changed for good?
You will need a cross-departmental approach. It’s rare for HR alone to be able to tackle the demands of the action plan. Given the business-critical nature of the licence, senior management and legal will need to be actively involved.
Section D: Sponsor licence Home Office action plans
In circumstances where the Home Office has reason to believe that the sponsor is failing to discharge its duties, including where a licensed organisation has failed to provide any information requested of it, this could potentially result in a sponsor licence being downgraded from an A- to B-rating. This also means that the Home Office will put in place a time-limited action plan with steps to be taken by the sponsor to restore that rating.
If UKVI finds wider or systemic failings, it may bypass the downgrade stage and move directly to suspension or revocation.
A sponsorship action plan is designed to address any non-compliance as a licensed sponsor, where the plan will set out the steps that need to be taken to help reinstate an A-rating. These steps could include, for example, making improvements to record-keeping, improving control over staff who assign CoS, or improving communication between different branches so it is clear when a sponsored worker has not turned up for work.
The sponsor has to pay the Home Office £1,579 for the action plan, which must be paid within 10 working days of the downgrade notification. Failure to pay on time can result in licence revocation.
Generally speaking, a sponsorship action plan will only be put in place by the Home Office to address relatively minor breaches of duty. The sponsor licence holder must also be willing and able to correct the issues in question by following an action plan within the prescribed timeframe. For more serious breaches, or where there is any reluctance or inability on the part of the sponsor to rectify the conduct that led to the Home Office action plan in the first place, this may instead result in revocation of the licence.
For a provisional sponsor on the UK Expansion Worker (GBM) route, their licence cannot be downgraded to a B-rating. This means that an action plan will not be issued if a provisional sponsor fails to meet their sponsor duties or otherwise fails to meet the requirements of the sponsor guidance. However, the Home Office will consider revoking the licence.
If the sponsor accepts the action plan and makes payment within 10 working days, it will then have a period of 3 months to put right any issues that resulted in its failing to meet its sponsorship duties. As a downgraded sponsor, an organisation must therefore respond to the Home Office recommendations contained within the plan as soon as possible.
After the end of the 3-month period, the Home Office will carry out further compliance checks to establish whether the sponsoring organisation has met all of the action plan measures, at which stage there are three possible outcomes:
a. The sponsor licence is revoked: this is where the sponsor has not satisfactorily met the requirements of its action plan or more serious areas of non-compliance have arisen that justify immediate revocation of the licence.
b. A second action plan is needed: this is where the Home Office discovers other areas of non-compliance which were not addressed by the current action plan, but do not warrant immediate revocation, where a second action plan and additional fee will be required.
c. The sponsor’s A-rating is restored: this is where the sponsor has met all the requirements of its action plan and the Home Office has no other concerns. In addition to restoring the sponsor’s A-rating, the sponsor’s allocation of CoS will also be reviewed, where necessary, so that the organisation is able to sponsor new migrant workers again if needed.
DavidsonMorris Strategic Insight
In most cases, licence downgrades are the result of avoidable admin errors. They may appear harmless or unintentional, but the Home Office treats even minor breaches as systemic failings.
If you rely on overseas recruitment and sponsored workers, invest the time and budget in managing your licence correctly to avoid the potential disruption to your sponsorship permission and the slippery slope of enforcement action. Regular audits are incredibly valuable in identifying issues and training should be an ongoing concern for personnel involved with the licence and overseas recruitment, not least because the rules are so complicated and are changed frequently.
Section E: How to avoid a sponsor licence downgrade
There are various duties associated with sponsoring migrant workers, where it is essential that employers, and those within the business responsible for managing the sponsorship process, understand what is required of them to avoid a sponsor licence downgrade. Failing to maintain compliance does not just create administrative inconvenience, it exposes the organisation to enforcement action that can disrupt recruitment and threaten existing sponsored roles.
The sponsor’s duties include reporting any change in circumstances of a sponsored worker and reporting any changes relating to the business itself; ensuring that job roles and candidates are suitable for sponsorship, including conducting right to work checks; maintaining accurate records for all sponsored workers; and co-operating with the Home Office, such as responding to any requests for further information or documentation. These duties must be met consistently, as even seemingly minor lapses can be classed as breaches of the Immigration Rules and sponsor guidance.
In practice, this means that HR and compliance teams must have clear processes in place. Reporting must be done within strict deadlines using the Sponsorship Management System (SMS). Right to work checks must be conducted correctly and documented to provide a statutory excuse against civil penalties. Records relating to recruitment, contracts, salaries, absences, and contact details must be stored in line with Appendix D of the sponsor guidance, and be readily available for inspection during a UKVI compliance visit. Internal training for staff who interact with sponsored workers or the SMS is also strongly advisable, to ensure obligations are understood and consistently applied across the organisation.
| Duty | Practical Requirement | Why It Matters |
|---|---|---|
| Reporting duties | Report worker and business changes via SMS within strict deadlines. | Failure to report can lead to licence downgrade or revocation. |
| Record-keeping | Maintain files in line with Appendix D (e.g. contracts, right to work documents, absences). | Incomplete files are one of the most common reasons for downgrades. |
| Right to work checks | Carry out prescribed checks and retain evidence for all staff. | Incorrect checks remove statutory excuse and risk civil penalties. |
| HR systems | Ensure processes for monitoring attendance, salary, and role changes. | Weak systems signal poor compliance and attract Home Office scrutiny. |
| Cooperation with UKVI | Respond promptly to requests and prepare for audits or visits. | Non-cooperation can result in immediate suspension or revocation. |
Employers should also carry out regular internal audits of their HR systems and personnel files to identify and resolve any gaps before the Home Office discovers them. Mock compliance visits, either in-house or with external advisers, can highlight weak points such as incomplete worker files, late reporting of job changes, or inconsistent processes across different sites. These proactive steps significantly reduce the risk of a downgrade, suspension, or revocation.
Being a sponsor comes with significant responsibility, where the rules can be complex, often resulting in confusion or shortcomings, and exposing employers to serious compliance risks. To avoid any enforcement action being taken by the Home Office in the event of any uncertainty, seeking expert advice from an immigration specialist is strongly recommended. Expert advisers can not only explain how the rules apply to your organisation but also help design compliance frameworks that are proportionate to your business size, sector, and workforce.
Section F: Summary
Managing a sponsor licence requires constant attention and well-structured HR systems. A downgrade from an A to a B rating is more than an administrative label, it directly restricts your ability to recruit overseas talent and places your existing workforce under strain. Employers that fall short of their duties face not only the financial burden of action plans but also the reputational and operational impact of Home Office scrutiny. The strict deadlines and non-negotiable fees leave little margin for error, and repeat failings can result in licence revocation with a lengthy cooling-off period. For organisations dependent on international recruitment, such disruption can undermine workforce planning and client delivery. The only sustainable way to avoid these risks is by embedding robust compliance across all levels of the business, from onboarding procedures through to senior oversight, supported where necessary by specialist legal advice.
Section G: Need assistance?
DavidsonMorris are specialists in UK sponsorship licences. We provide expert advice on issues such as sponsor licence downgrades, suspensions and revocations, as well as all other aspects of UK sponsorship duties. We can also support you through the Home Office action plan process, from the written representations that can be made on notification of the action to be taken against the sponsor, to exploring ways to help put in place the necessary systems and people that will help you to restore your licence rating.
If you have received notification that your sponsor licence is being downgraded, speak to us about your next steps.
Section H: Sponsor licence downgrade FAQs
What is a sponsor licence downgrade?
A sponsor licence downgrade occurs when UK Visas and Immigration (UKVI) reduces an employer’s licence rating from A-rated to B-rated due to non-compliance with sponsorship duties.
Why would a sponsor licence be downgraded?
A downgrade may happen if an employer fails to meet their sponsorship duties, such as not keeping accurate records, failing to report changes in sponsored workers’ circumstances, or breaching UK immigration rules.
What happens if a sponsor licence is downgraded?
Employers will be placed on a B-rated licence and must follow a UKVI-issued action plan to address compliance failures. They cannot sponsor new workers until they regain an A-rating.
How long does an employer have to regain an A-rating?
A sponsor must complete the steps in the action plan within three months. If they fail to do so, their licence may be revoked.
Can an employer continue sponsoring existing workers with a downgraded licence?
Yes, but they cannot assign new Certificates of Sponsorship (CoS) until they regain an A-rating.
How much does it cost to follow an action plan?
The fee for a UKVI action plan is £1,579, which must be paid to restore the licence rating.
Can a sponsor licence be reinstated after revocation?
If UKVI revokes a licence, the employer must wait 12 months before reapplying. There is no guarantee that a new licence will be granted.
How can employers avoid a sponsor licence downgrade?
Employers should ensure full compliance with sponsorship duties, keep accurate records, report changes promptly, and conduct internal audits to maintain their A-rating.
Section I: Glossary
| Term | Definition |
|---|---|
| Sponsor Licence | A permit issued by UK Visas and Immigration (UKVI) allowing UK employers to hire skilled foreign workers. |
| Sponsor Licence Downgrade | The process where UKVI reduces an employer’s licence rating from A-rated to B-rated due to non-compliance with sponsorship duties. |
| A-rated Licence | The standard rating for a compliant sponsor, allowing them to issue Certificates of Sponsorship (CoS) to skilled workers. |
| B-rated Licence | A temporary status given to a sponsor that has failed to meet compliance requirements. Employers with a B-rating cannot sponsor new workers until they regain an A-rating. |
| Action Plan | A set of compliance measures issued by UKVI that a B-rated sponsor must follow within three months to regain an A-rating. |
| Certificate of Sponsorship (CoS) | A digital document assigned to a worker by a licensed sponsor, allowing them to apply for a work visa. |
| Revocation of Sponsor Licence | The cancellation of a sponsor licence due to serious non-compliance, preventing the employer from hiring or sponsoring foreign workers. |
| Suspension of Sponsor Licence | A temporary restriction placed on a sponsor licence while UKVI investigates compliance breaches. During suspension, employers cannot issue new CoS. |
| UK Visas and Immigration (UKVI) | A division of the Home Office responsible for processing visas, managing sponsorship compliance, and enforcing immigration laws. |
| Immigration Compliance Audit | An inspection carried out by UKVI to ensure that sponsors are meeting their duties, including record-keeping and reporting obligations. |
| Right to Work Check | A legal requirement for employers to verify that all employees have the legal right to work in the UK. |
| Sponsor Management System (SMS) | An online system used by licensed sponsors to manage their sponsorship duties, report changes, and assign CoS. |
| Statutory Excuse | A legal defence for employers who have conducted proper right to work checks but later find out an employee does not have valid immigration status. |
| Civil Penalty | A financial penalty imposed on employers who fail to conduct the required right to work checks, which can be up to £45,000 per breach for first offences, or up to £60,000 for repeat breaches. |
| Cooling-off Period | A mandatory waiting period after a licence is revoked before an employer can reapply for a new sponsor licence. |
Section J: Additional resources and links
| Resource | Description | URL |
|---|---|---|
| UKVI Sponsor Guidance (Part 1) | Official Home Office guidance for organisations applying for a sponsor licence. | https://www.gov.uk/government/publications/sponsor-a-worker-guidance-for-employers |
| UKVI Sponsor Guidance (Part 3) | Detailed guidance on sponsor duties and compliance responsibilities for licence holders. | https://www.gov.uk/government/publications/workers-and-temporary-workers-guidance-for-sponsors-part-3-sponsor-duties-and-compliance |
| Register of Licensed Sponsors | Public list of employers currently licensed by the Home Office to sponsor workers. | https://www.gov.uk/government/publications/register-of-licensed-sponsors-workers |
| Right to Work Checks | Guidance on conducting right to work checks to maintain compliance and statutory excuse. | https://www.gov.uk/check-job-applicant-right-to-work |
| Appendix Skilled Worker | Immigration Rules setting out eligibility and requirements for Skilled Worker visas. | https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-skilled-worker |
