Sponsor Licence & Insolvency: Rules for UK Employers

Sponsor Licence & Insolvency: At a Glance

Insolvency can affect a UK employer’s sponsor licence, its Home Office reporting duties and the immigration position of sponsored workers. The outcome depends on the insolvency procedure, whether the business continues trading, whether ownership changes and whether employees transfer to another legal entity.

Financial distress alone does not automatically cancel a sponsor licence. Formal insolvency events can, however, trigger specific Home Office requirements. Administration, company voluntary arrangements, liquidation and business sales are treated differently under the sponsor guidance.

A company entering administration or administrative receivership must notify the Home Office within 20 working days, and the appointed insolvency practitioner is required to become the sponsor’s Authorising Officer. A CVA without an ownership change can allow the existing licence to continue, while voluntary or compulsory liquidation leads to revocation.

Where ownership changes or the business is sold, the sponsor licence does not transfer automatically to the purchaser. The successor organisation may need its own sponsor licence or additional authorisation, and qualifying transfer provisions may apply to sponsored workers.

Employers also need to assess the effect of redundancies, salary reductions, changes to duties and business closure on sponsored employees. Loss of sponsorship can affect immigration permission, but the commonly cited 60-day period is not an automatic entitlement from the date of insolvency or redundancy.

This guide explains how insolvency affects sponsor licences, sponsored workers, administration, CVAs, liquidation, Home Office reporting, business rescue, successor sponsorship and right to work compliance.

 

Section A: Sponsor Licence Rules When a Business Becomes Insolvent

 

When a licensed sponsor experiences financial distress or enters formal insolvency proceedings, the first step is to establish which insolvency event has occurred and what that means for the sponsor licence.

The Home Office does not apply one uniform rule to insolvency. Administration, CVAs, liquidation, debt arrangements, ownership changes and business transfers can all produce different sponsorship outcomes.

The employer or insolvency practitioner should also identify the sponsored workforce, current licence status, key personnel, SMS access and any proposed changes to employment arrangements at an early stage.

 

1. Does Financial Distress Affect a Sponsor Licence?

 

Financial distress does not, by itself, automatically revoke a sponsor licence. An organisation can remain licensed while experiencing cash-flow difficulties or restructuring its debts.

The compliance risk usually arises from the measures taken in response to that financial pressure. Salary reductions, reduced working hours, changes to duties, redundancies, site closures and failures in HR systems can all affect sponsored workers or create Home Office reporting obligations.

For example, a Skilled Worker may agree to a temporary salary reduction as part of a wider cost-saving exercise. The employer still needs to establish whether the revised salary remains compliant with the immigration requirements for the sponsored role.

Employers should therefore review the immigration consequences of proposed workforce changes before implementation, even where formal insolvency proceedings have not yet begun.

 

2. What Happens to a Sponsor Licence During Administration?

 

Administration does not automatically bring sponsorship to an end, but it triggers specific Home Office requirements.

A sponsoring organisation entering administration or administrative receivership must notify the Home Office within 20 working days. The appointed insolvency practitioner should also be informed about the sponsor licence as soon as possible.

The Home Office guidance requires the administrator or administrative receiver to become the sponsor’s Authorising Officer through the prescribed procedure.

The administrator should also establish who retains authorised Sponsor Management System access. Appointment as administrator does not automatically provide SMS access and does not permit use of another person’s account.

If the company continues trading, sponsorship obligations continue while the organisation remains authorised. The position should be reassessed if the business is sold, employees are made redundant or ownership changes.

 

3. Can a Company Keep Its Sponsor Licence Under a CVA?

 

A company voluntary arrangement can allow the sponsor licence to continue where ownership remains unchanged.

The employer must notify the Home Office within 20 working days of the CVA being agreed and continue to meet its sponsorship duties.

Where the CVA results in a change of ownership, the position is different. The Home Office treats the circumstances as a business sale and the existing sponsor licence is revoked, leaving the new owner to address the relevant successor sponsorship requirements.

Employers considering a CVA should therefore assess the ownership consequences alongside the financial terms of the arrangement.

 

4. What Happens to a Sponsor Licence During Liquidation?

 

Voluntary and compulsory liquidation lead to sponsor licence revocation under the Home Office sponsor guidance.

The sponsoring organisation must notify the Home Office within 20 working days of entering liquidation. The fact that the company remains registered at Companies House or continues limited trading during the winding-up process does not preserve its sponsorship authorisation.

Where SMS access is unavailable, the sponsor guidance provides an alternative notification route through the Sponsorship Compliance Team.

The liquidator should also identify the sponsored workforce, preserve relevant records and assess the effect of licence revocation and employment termination on individual workers.

 

5. What Happens Under Other Debt Arrangements?

 

Other debt management or restructuring arrangements can produce different outcomes from liquidation.

Where the relevant Home Office provisions permit the licence to continue and ownership remains unchanged, the organisation still needs to comply with any notification requirements and maintain its sponsorship systems.

The correct analysis depends on the type of arrangement, whether ownership changes and whether the employer remains able to meet its obligations to sponsored workers.

The absence of liquidation should therefore not be treated as confirmation that no Home Office action is required.

 

6. What Happens if Ownership Changes or the Business Is Sold?

 

Ownership changes and business sales need a separate sponsor licence assessment in addition to the insolvency analysis.

A sponsor licence belongs to the licensed legal entity and cannot simply be transferred to a purchaser. Where the transaction amounts to a relevant change in direct ownership under the Home Office rules, the existing licence may be revoked or made dormant and the successor organisation may need to obtain sponsorship authorisation.

The position is particularly important in administration sales, pre-pack transactions and corporate rescues where a purchaser intends to retain the sponsored workforce.

Qualifying business-transfer provisions can allow sponsored workers to continue without ordinary change-of-employer applications in some circumstances, but the successor still needs to satisfy the applicable licensing and reporting requirements.

The purchaser’s sponsor licence position should therefore be established before completion.

 

7. Sponsor Licence Outcomes by Insolvency Procedure

 

Insolvency event	Sponsor licence position	Principal action
Financial distress without formal insolvency	The licence does not automatically end.	Review workforce changes and continue meeting sponsor duties.
Administration or administrative receivership	The licence position remains subject to the administration rules and continuing compliance.	Notify the Home Office within 20 working days and appoint the insolvency practitioner as Authorising Officer.
CVA without ownership change	The existing licence can continue.	Notify the Home Office within 20 working days and maintain compliance.
CVA involving ownership change	The Home Office treats the arrangement as a business sale and revokes the existing licence.	Address ownership-change reporting and successor sponsorship.
Specified debt arrangements without ownership change	Continued licensing may be permitted.	Check the relevant arrangement and reporting requirements.
Voluntary liquidation	The Home Office will revoke the licence.	Notify the Home Office within 20 working days and assess the sponsored workforce.
Compulsory liquidation	The Home Office will revoke the licence.	Notify the Home Office within 20 working days and address outstanding sponsorship obligations.
Business sale or takeover	The licence does not automatically transfer to the purchaser.	Assess successor licensing and sponsored worker transfer requirements.

 

8. Why Immigration Should Be Included in Insolvency Planning

 

For businesses that rely on sponsored workers, the sponsorship position can affect the commercial viability of a rescue, administration or sale.

A purchaser may value the business partly because of its specialist workforce, but that value can be compromised if the buyer cannot lawfully retain sponsored employees. Equally, administrators may depend on those workers to keep the business trading while a sale is negotiated.

Employers should identify sponsored workers, establish the licence position and review Home Office deadlines as soon as administration, liquidation, a CVA or a business sale becomes a realistic possibility.

Where a transaction is contemplated, successor sponsorship should form part of due diligence and completion planning.

 

9. When Should Employers Obtain Immigration Advice?

 

Specialist immigration advice should be considered as soon as financial difficulties are likely to affect the sponsor licence, sponsored workforce or business structure.

Advice is particularly relevant where the organisation is considering administration, liquidation, a CVA, substantial redundancies, salary reductions or a business sale.

Where formal insolvency proceedings have already begun, the employer or insolvency practitioner should establish the sponsorship position promptly, identify outstanding notifications and review any immediate workforce changes.

Immigration advice should be coordinated with insolvency, corporate and employment law advice so that decisions concerning the business and workforce are based on a consistent legal position.

 

 

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Section B: Sponsor Licence During Administration

 

1. What Happens to a Sponsor Licence When a Company Enters Administration?

 

When a company holding a UK sponsor licence enters administration, specific Home Office requirements apply to the organisation and the appointed administrator.

Administration is a formal insolvency procedure under which an insolvency practitioner takes control of the company’s affairs, business and property. The administrator may seek to rescue the company as a going concern, achieve a better outcome for creditors than immediate liquidation or realise property to make distributions to secured or preferential creditors.

The company may continue trading during administration, particularly where the administrator intends to preserve the business or arrange a sale.

However, continued trading does not automatically determine whether the organisation can retain its sponsor licence.

The Home Office sponsor guidance contains specific provisions for organisations entering administration or administrative receivership. These requirements must be addressed alongside the wider insolvency process.

Under paragraph C3.1 of the Workers and Temporary Workers sponsor guidance, the organisation must notify the Home Office within 20 working days of entering administration or administrative receivership.

The organisation must also inform the appointed insolvency practitioner about its sponsor licence as soon as possible.

The administrator must then address the requirements concerning sponsorship key personnel, including the mandatory appointment of the insolvency practitioner as Authorising Officer.

The company’s ability to continue sponsoring workers must be considered according to its licence status, the Home Office rules and the circumstances of the administration.

Administrators should therefore establish the immigration sponsorship position immediately rather than assuming that the licence can continue operating in the same way as before their appointment.

 

2. Must the Home Office Be Notified When Administrators Are Appointed?

 

Yes. A sponsoring organisation entering administration or administrative receivership must notify the Home Office within 20 working days.

This is a specific requirement under section C3 of the Home Office sponsor guidance.

The notification should be distinguished from other reporting obligations that may arise during the administration.

For example, the company may subsequently dismiss sponsored employees, change their employment arrangements, relocate business operations or sell part of its undertaking.

These developments may require separate consideration under the sponsor reporting rules.

Reporting the appointment of administrators does not automatically satisfy every subsequent notification requirement.

The organisation should therefore maintain a record of the date administration commenced, the date the Home Office was notified and any additional events affecting its sponsorship arrangements.

Where the company has already entered administration without making the required notification, the administrator should establish the position promptly and consider the appropriate corrective action.

The expiry of a reporting deadline does not mean that the organisation should simply leave the Home Office uninformed.

Accurate reporting is particularly important where the administration may result in a business sale, changes in ownership or the transfer of sponsored employees to another organisation.

 

3. Does the Administrator Have to Become the Authorising Officer?

 

Yes. The Home Office sponsor guidance expressly requires the insolvency practitioner appointed as administrator or administrative receiver to be appointed as the sponsor’s Authorising Officer.

Paragraph C3.2 establishes this requirement and sets out the procedures to be followed.

The Authorising Officer is the individual with overall responsibility for the organisation’s sponsorship activities and compliance with the sponsor licensing requirements.

Ordinarily, a licensed sponsor must designate an appropriate senior individual to undertake this role.

However, where the company enters administration or administrative receivership, the specific insolvency provisions require the appointed insolvency practitioner to assume the Authorising Officer position through the prescribed process.

The appointment as administrator does not itself update the Home Office’s sponsorship records. The necessary steps must be taken to reflect the change in the sponsor’s key personnel arrangements.

The procedure depends on whether the organisation retains its existing Level 1 User.

Where the existing Level 1 User remains in place, the relevant changes can be made through the prescribed SMS process.

Where the existing Level 1 User is not retained, the insolvency practitioner must follow the change of circumstances procedure to obtain the necessary access and arrange their appointment as Authorising Officer.

Administrators should not treat the requirement as an optional administrative matter.

Failure to address the Authorising Officer position can create additional sponsorship compliance risks at a time when the organisation may already be subject to heightened regulatory scrutiny.

 

4. Can an Administrator Access the Sponsor Management System?

 

An administrator may need access to the Sponsor Management System (SMS) to address the organisation’s reporting and compliance obligations.

However, appointment as an insolvency practitioner does not automatically provide access to the SMS.

Access must be established through the procedures authorised by the Home Office.

The administrator should first identify the organisation’s existing sponsorship key personnel and determine whether the Level 1 User remains available.

Where the existing Level 1 User is retained, that individual may be able to undertake the necessary SMS actions in accordance with their authorised permissions.

Where the Level 1 User has left the organisation or is no longer able to act, the administrator must follow the relevant Home Office procedure for changing key personnel and securing appropriate system access.

It is not acceptable for an administrator or another individual to use a former employee’s SMS login credentials.

The Home Office’s SMS security requirements apply notwithstanding the company’s insolvency.

Administrators should also distinguish between obtaining technical access to the SMS and establishing that the organisation remains authorised to sponsor workers.

The ability to access an account does not override restrictions arising from the company’s licence status.

 

5. How Do the September 2026 SMS Changes Affect Administrators?

 

Administrators taking control of a licensed sponsor must take account of changes to the Home Office’s SMS access arrangements introduced in September 2026.

Mandatory multi-factor authentication was introduced for SMS users from 3 September 2026.

The Home Office also began phasing out Level 2 Users from 9 September 2026, alongside changes affecting inactive user accounts.

These developments are particularly relevant where a business enters administration and its existing HR or immigration compliance personnel leave the organisation.

For example, an administrator may discover that the individual responsible for sponsorship reporting has been made redundant and that no other suitable person has current authorised SMS access.

In those circumstances, the administrator must establish the appropriate procedure for restoring or obtaining access rather than attempting to use the former employee’s credentials.

Where multi-factor authentication is required, the authorised user must satisfy the applicable authentication process.

Administrators should identify access problems at the outset because delays may affect the organisation’s ability to submit required notifications within the relevant deadlines.

The company should also review whether its sponsorship key personnel records remain accurate following management changes.

SMS access arrangements should form part of the administrator’s initial review of the organisation’s regulatory systems.

 

6. Can a Company Continue Sponsoring Workers During Administration?

 

The ability to continue sponsoring workers during administration depends on the company’s sponsor licence status and the applicable Home Office requirements.

The fact that the company continues trading does not independently establish that sponsorship can continue.

Where the organisation remains authorised to sponsor workers, it must continue satisfying the relevant sponsor duties.

These include maintaining appropriate records, monitoring sponsored employees, reporting specified changes and ensuring that sponsored employment remains compliant with the applicable immigration requirements.

For example, an administrator may decide to continue operating a business while seeking a purchaser.

During that period, the company may retain employees who hold Skilled Worker permission.

The administrator must establish whether the organisation remains authorised to sponsor those employees and whether their employment arrangements continue to satisfy the relevant conditions.

Where the Home Office revokes the licence, the organisation cannot continue sponsoring workers under that licence merely because their employment contracts remain in force.

Similarly, an administrator should not assume that existing Certificates of Sponsorship remain available for use regardless of the company’s licence status.

The position must be established before the organisation undertakes further sponsorship activity.

 

7. Can Administrators Assign New Certificates of Sponsorship?

 

An administrator should not assume that the company can assign new Certificates of Sponsorship simply because it continues trading or has an unused CoS allocation.

The organisation must remain authorised to sponsor workers and must satisfy the relevant requirements for assigning a Certificate of Sponsorship.

Where the sponsor licence has been revoked, the company cannot assign new Certificates of Sponsorship under that licence.

Where sponsorship authorisation remains in place, the administrator must still consider whether the proposed role and employment arrangements satisfy the applicable immigration requirements.

For example, a business in administration may wish to recruit a replacement employee to maintain essential operations while a sale is negotiated.

If the proposed employee requires Skilled Worker sponsorship, the administrator must establish whether the company can lawfully assign a Certificate of Sponsorship and whether the role meets the relevant requirements.

The commercial importance of the recruitment does not create an exemption from the sponsorship rules.

Administrators should also consider whether the proposed employment is commercially and legally appropriate in the circumstances of the administration.

The availability of a Certificate of Sponsorship allocation should not be confused with a continuing entitlement to sponsor additional workers.

 

8. What Happens to Existing Sponsored Workers During Administration?

 

Employees sponsored under the Skilled Worker or another sponsored work route may remain employed while a company is in administration.

However, their immigration position must be assessed separately from the continuation of their employment contracts.

The administrator should establish whether the sponsor licence remains valid, whether the organisation continues to satisfy its sponsorship duties and whether the workers remain employed in the roles for which they were sponsored.

Where sponsorship can lawfully continue, the organisation must maintain appropriate records and comply with its reporting obligations.

Where the licence is revoked or the employees’ sponsored employment ends, the Home Office may take action affecting their immigration permission.

Such consequences are not necessarily immediate or identical for every worker.

The administrator should therefore avoid informing employees that their immigration permission automatically expires on the date administration begins.

Equally, employees should not be assured that their existing immigration permission remains unaffected until its original expiry date.

The position depends on the relevant Immigration Rules, the circumstances of the sponsorship and any Home Office decision.

Where workers may be affected by redundancy or a business transfer, those developments should be considered before the relevant decisions are implemented wherever practicable.

 

9. Can Administrators Change Sponsored Workers’ Salaries or Working Hours?

 

Administrators may need to reduce operating costs while seeking to rescue or sell a business.

Proposed measures may include reducing salaries, shortening working hours, changing shifts or reorganising employee duties.

Where sponsored workers are affected, these changes must be assessed against the applicable immigration requirements.

For example, a Skilled Worker may be sponsored on the basis of a particular occupation and salary.

A proposed salary reduction could affect whether the employee continues to satisfy the requirements of the Skilled Worker route.

Similarly, a reduction in working hours may affect the worker’s salary position or trigger relevant reporting obligations.

The employee’s agreement to a contractual variation does not automatically make the arrangement compliant with immigration law.

Administrators should therefore establish whether the proposed changes are permitted, whether the Home Office must be notified and whether a new immigration application is required.

Where the business cannot maintain compliant sponsored employment, the administrator may need to consider alternative arrangements.

These decisions should be coordinated with the company’s employment law obligations and the wider objectives of the administration.

 

10. Can Sponsored Workers Be Made Redundant During Administration?

 

Sponsored workers may be affected by redundancy during administration, subject to the applicable employment law requirements.

The fact that an employee holds Skilled Worker permission does not remove their employment rights or automatically prevent redundancy.

However, the termination of sponsored employment creates additional immigration considerations.

Where a sponsored worker’s employment ends, the employer must consider its obligation to report the cessation of sponsorship to the Home Office.

The worker may also face cancellation or shortening of their immigration permission under the applicable Immigration Rules and Home Office policy.

The administrator should therefore identify sponsored employees before implementing redundancies and ensure that the required sponsorship notifications are addressed.

Workers should be given accurate information about the employment decision and encouraged to obtain individual immigration advice where their permission may be affected.

Administrators should avoid telling workers that they automatically have 60 days from their redundancy date to find another sponsor.

The actual immigration position depends on the worker’s existing permission and any relevant Home Office cancellation decision.

Redundancy entitlements and immigration permission should also be treated as separate legal issues.

A sponsored employee may have rights to statutory redundancy payments, notice pay or other employment-related sums without those rights preserving their immigration permission.

 

11. What Happens if the Administrator Sells the Business?

 

Administrators may seek to sell a company’s business as a going concern to preserve commercial value and achieve an appropriate outcome for creditors.

Where the business employs sponsored workers, the sale must be assessed against the Home Office rules governing changes in ownership and business transfers.

A sponsor licence does not automatically transfer to the purchaser.

The purchaser must establish whether it holds the necessary sponsorship authorisation and whether the transaction satisfies the relevant Home Office business-transfer requirements.

In qualifying circumstances, sponsored workers transferring under TUPE or similar protection may be able to continue their employment without making an ordinary change-of-employer immigration application.

However, the relevant conditions must be satisfied.

Where the successor organisation does not hold the appropriate sponsor licence, the Home Office guidance provides specific requirements concerning applications for authorisation following the transfer.

Under the applicable business-transfer provisions, the successor may be required to apply for a sponsor licence or extend its existing licence within 20 working days of the transfer.

If the required valid application is not made within 20 working days, or the application is refused, the transferred workers will have their immigration permission cancelled, except any workers who can be sponsored under an appropriate existing licence held by the incoming organisation.

The administrator and purchaser should therefore establish the sponsorship arrangements before completion.

These issues are particularly important in pre-pack administrations, where the transaction may be completed shortly after the administrator’s appointment.

The detailed rules governing acquisitions and successor sponsorship are considered in Section F.

 

12. Can a Pre-Pack Administration Preserve Sponsored Employment?

 

A pre-pack administration involves arranging the sale of a company’s business or assets before the administrator is formally appointed, with completion occurring shortly after the appointment.

The transaction may allow business operations to continue with limited interruption.

However, continuity of trading does not automatically preserve the seller’s sponsor licence or authorise the purchaser to sponsor its employees.

Where the purchaser is a different legal entity, the parties must establish the relevant Home Office business-transfer requirements.

For example, a newly incorporated company may purchase the trading operations of an insolvent business and retain most of its workforce.

Although employees may continue working at the same premises and performing the same duties, the purchaser is not automatically authorised to sponsor them.

The purchaser must establish whether it has the appropriate licence and whether the transfer qualifies under the relevant sponsorship provisions.

Where the purchaser needs to obtain authorisation, the applicable application requirements and deadlines must be addressed.

Administrators should therefore identify sponsored workers during the pre-pack planning process.

Leaving sponsorship issues until after completion can create avoidable immigration and operational risks.

 

13. What Records Should Administrators Preserve?

 

Administrators should ensure that sponsorship records are preserved as part of the organisation’s regulatory and employment documentation.

Insolvency proceedings can result in the rapid closure of premises, termination of IT services and departure of HR personnel.

These developments can make sponsorship records difficult to retrieve.

Relevant records may include:

 

• Details of the organisation’s sponsor licence and authorised immigration routes.
• Certificates of Sponsorship assigned to existing workers.
• Sponsored workers’ contact details and relevant immigration records.
• Employment contracts and records of sponsored job duties.
• Salary, payroll and working-hours records.
• Records of work locations and changes to employment arrangements.
• Home Office reporting records and correspondence.
• Details of the Authorising Officer, Key Contact and authorised SMS users.
• Records of redundancies and the dates sponsored employment ended.
• Documents concerning any proposed or completed business transfer.

 

The records should be maintained in accordance with the applicable sponsor guidance and relevant data protection requirements.

Where a business is sold, the parties should establish what records must be retained by the original organisation and what information the purchaser needs to satisfy its own sponsorship obligations.

Preserving records does not itself establish continued sponsorship authorisation, but it can assist the organisation in meeting outstanding obligations and responding to Home Office enquiries.

 

14. Can the Home Office Conduct a Compliance Visit During Administration?

 

The Home Office has powers to assess whether licensed sponsors comply with their sponsorship obligations.

Administration does not automatically remove the organisation from the sponsorship compliance framework.

Where the company remains licensed, it may be subject to Home Office compliance activity in accordance with the relevant guidance.

The Home Office may examine the organisation’s sponsorship records, monitoring arrangements, employment practices and compliance with reporting duties.

Administrators should therefore ensure that relevant records are available and that appropriate individuals can respond to Home Office enquiries.

Where key HR personnel have left the business, the administrator may need to identify alternative individuals who can explain the organisation’s sponsorship arrangements.

The administrator should also establish whether any existing compliance concerns, pending Home Office enquiries or enforcement action were known before the insolvency appointment.

Insolvency does not automatically extinguish the regulatory significance of earlier sponsorship failures.

Where the Home Office identifies serious breaches, the organisation may face enforcement consequences under the sponsor guidance.

Any compliance visit or enquiry should therefore be addressed with accurate information and appropriate legal advice.

 

15. Administration Sponsor Licence Checklist

 

Administrators appointed to a company holding a sponsor licence should undertake an early review of its immigration sponsorship arrangements.

 

Action	Purpose
Confirm the sponsoring legal entity and licence details.	Establish which organisation holds the Home Office authorisation.
Record the administration appointment date.	Identify the relevant insolvency event and reporting deadline.
Notify the Home Office within 20 working days.	Comply with the specific administration notification requirement.
Arrange the insolvency practitioner’s appointment as Authorising Officer.	Comply with the mandatory requirement under paragraph C3.2.
Review authorised SMS access.	Ensure reporting can be undertaken through legitimate user accounts.
Identify all sponsored employees.	Establish the workforce affected by sponsorship requirements.
Review proposed salary, hours and duty changes.	Identify potential breaches or additional immigration requirements.
Assess planned redundancies.	Address worker reporting and immigration consequences.
Preserve sponsorship records.	Maintain evidence required for compliance and Home Office enquiries.
Review any proposed business sale.	Establish purchaser licensing and successor sponsorship requirements.
Identify outstanding Home Office correspondence.	Address existing compliance issues or enforcement concerns.
Maintain a record of sponsorship decisions.	Document actions taken during administration.

 

The checklist should be adapted to the circumstances of the business, the number of sponsored workers and the proposed administration strategy.

Where the business is likely to be sold or closed, the immigration consequences should be assessed before implementing the relevant decisions wherever practicable.

 

16. Why Sponsor Licence Compliance Matters During Administration

 

Administration often involves urgent commercial decisions affecting the future of a business and its employees.

For companies employing sponsored workers, immigration compliance can influence whether operations can continue, whether essential employees can be retained and whether a purchaser can acquire the business as a functioning undertaking.

The administrator must therefore understand the organisation’s sponsor licence position and the Home Office requirements triggered by the appointment.

These include the 20-working-day notification requirement, the mandatory appointment of the insolvency practitioner as Authorising Officer and the continuing obligations affecting sponsored workers.

Where the company remains authorised to sponsor workers, it must continue meeting the relevant compliance requirements.

Where the licence is revoked or sponsored employment ends, the consequences for workers must be considered.

Where the business is sold, the purchaser’s sponsorship authorisation and the applicable transfer requirements must be established.

Early attention to these matters can help avoid preventable compliance failures and support informed decisions about business rescue, workforce restructuring and employee transfers.

 

 

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Section C: Sponsor Licence During Liquidation and Business Closure

 

1. What Happens to a Sponsor Licence When a Company Enters Liquidation?

 

When a company holding a UK sponsor licence enters liquidation, the Home Office rules provide for revocation of its sponsorship authorisation.

Liquidation is a formal insolvency procedure through which a company’s affairs are wound up, assets are realised and available funds are distributed in accordance with the applicable insolvency rules.

A company may enter liquidation voluntarily or following a court order. Although the procedures differ, both are expressly addressed in the Home Office sponsor guidance.

Under paragraph C3.7 of the Workers and Temporary Workers sponsor guidance, an organisation entering voluntary or compulsory liquidation must notify the Home Office within 20 working days of entering liquidation.

The guidance states that the Home Office will then revoke the sponsor licence.

This is an important distinction from administration and certain creditor arrangements, where the sponsorship consequences must be considered under different provisions.

The fact that the company remains registered at Companies House does not preserve its authority to sponsor workers.

Similarly, a liquidator’s decision to continue limited trading while realising assets does not override the Home Office’s liquidation provisions.

Employers and liquidators should therefore plan for the loss of sponsorship authorisation and assess the consequences for sponsored workers at the earliest opportunity.

 

2. Does Voluntary Liquidation Result in Sponsor Licence Revocation?

 

Yes. The Home Office guidance expressly provides for revocation where a sponsoring organisation enters voluntary liquidation.

For an insolvent company, this will commonly involve creditors’ voluntary liquidation (CVL), although the precise procedure must be established from the company’s circumstances.

In a creditors’ voluntary liquidation, the company’s affairs are wound up under the control of a liquidator, with the process directed towards realising assets and dealing with creditor claims.

Where the company holds a sponsor licence, it must notify the Home Office within 20 working days of entering liquidation.

The Home Office will then revoke the licence under the applicable sponsorship guidance.

The employer should not assume that its licence can remain in place until the liquidation has been completed.

Nor should the liquidator assume that the organisation can continue sponsoring workers because the company has not yet been dissolved.

The commencement of liquidation is the relevant event for the Home Office’s specific reporting requirement.

Where sponsored employees remain employed temporarily, their immigration position and the organisation’s outstanding sponsorship obligations must be considered.

These issues should be addressed alongside decisions concerning redundancy, the cessation of business operations and any proposed sale of assets.

 

3. What Happens During Compulsory Liquidation?

 

Compulsory liquidation generally follows a winding-up order made by the court.

The company’s affairs are then administered through the statutory liquidation process.

Where the company holds a sponsor licence, the Home Office guidance requires notification within 20 working days of entering compulsory liquidation.

The Home Office will then revoke the sponsor licence.

This requirement applies independently of whether the company has sponsored workers whose immigration permission remains valid.

The liquidator should therefore identify the organisation’s sponsor licence and establish whether the Home Office has been notified.

Where the company has already ceased trading, there may also be outstanding reporting obligations concerning sponsored employees whose employment has ended.

The company should preserve the relevant employment and sponsorship records, including details of Certificates of Sponsorship, termination dates and previous Home Office correspondence.

Compulsory liquidation may follow a period of financial distress during which the company has already reduced its workforce or failed to maintain its normal administrative systems.

The liquidator should therefore consider whether sponsorship compliance issues arose before the winding-up order.

Although liquidation results in revocation under the Home Office guidance, the organisation’s earlier conduct may remain relevant to any outstanding compliance enquiries.

 

4. When Must Liquidation Be Reported to the Home Office?

 

A sponsoring organisation must notify the Home Office within 20 working days of entering voluntary or compulsory liquidation.

This is the specific deadline established by paragraph C3.7 of the Home Office sponsor guidance.

The deadline should be distinguished from the general reporting periods applicable to other organisational or worker-related changes.

For example, the termination of a sponsored worker’s employment may require a separate report under the rules governing sponsored workers.

Similarly, where the company’s business is sold before or during liquidation, the transaction may create additional reporting requirements under the Home Office business-transfer provisions.

The liquidator should therefore identify the relevant events and assess each reporting obligation separately.

Reporting the commencement of liquidation does not necessarily discharge every outstanding sponsorship duty.

Where the company cannot access the Sponsor Management System, paragraph C3.7 provides for notification through the Home Office Sponsorship Compliance Team.

The liquidator should follow the reporting method specified in the current sponsor guidance and retain evidence of the notification.

Where the 20-working-day period has already expired, the liquidator should establish the position promptly and consider the appropriate corrective action.

 

5. What if the Liquidator Cannot Access the Sponsor Management System?

 

Access to the Sponsor Management System can become difficult when a company enters liquidation.

HR personnel may have been dismissed, the organisation’s Level 1 User may no longer be available or access to business systems may have been withdrawn.

However, these circumstances do not remove the requirement to notify the Home Office.

Paragraph C3.7 of the sponsor guidance provides an alternative notification procedure where the organisation cannot access the SMS.

The liquidator should contact the Home Office Sponsorship Compliance Team using the contact details and procedure specified in the current guidance.

The notification should accurately identify the sponsoring organisation and the relevant liquidation event.

Evidence of the notification should be retained with the company’s insolvency records.

The liquidator should not attempt to access the SMS using another individual’s credentials.

The Home Office’s account security requirements continue to apply.

Where additional worker-related reports are outstanding, the liquidator should establish how those matters can be communicated to the Home Office.

The inability to access the SMS should be treated as an issue requiring appropriate action, not as a reason to disregard sponsorship obligations.

 

6. Can a Company Continue Sponsoring Workers During Liquidation?

 

The Home Office guidance provides for revocation of the sponsor licence following notification of voluntary or compulsory liquidation.

A company should therefore not plan to continue sponsoring workers on the assumption that liquidation leaves its sponsorship authorisation unaffected.

The position of existing sponsored workers must be distinguished from the company’s authority to undertake further sponsorship activity.

Employees may continue to hold immigration permission following the commencement of liquidation, but their permission may subsequently be affected by the loss of sponsorship.

The fact that an employee’s immigration permission has not yet been cancelled does not mean that the liquidating company retains authority to assign new Certificates of Sponsorship.

Similarly, continued employment for a limited period during the winding-up process does not override the Home Office’s licence revocation provisions.

Where the liquidator intends to retain employees temporarily to complete outstanding work or assist with the sale of business assets, the immigration implications should be assessed.

This is particularly important where the employees’ permission is linked to the organisation under the Skilled Worker route.

The liquidator should establish the relevant sponsorship position and avoid making commitments concerning continued employment without considering the applicable immigration requirements.

 

7. What Happens to Existing Certificates of Sponsorship?

 

A Certificate of Sponsorship (CoS) is an electronic record assigned by a licensed sponsor to a worker in connection with an immigration application.

It is not a transferable business asset.

Where a sponsoring company enters liquidation and its licence is revoked, the consequences for Certificates of Sponsorship depend on whether they have been assigned, whether they have been used for immigration applications and the status of the relevant workers.

The company cannot continue assigning new Certificates of Sponsorship once its licence has been revoked.

Any unused CoS allocation does not create an independent entitlement to sponsor workers after revocation.

Certificates of Sponsorship also cannot simply be sold or transferred to a purchaser of the company’s business.

Where a worker has already used a Certificate of Sponsorship to obtain immigration permission, the worker’s existing permission must be considered separately.

The Home Office may take action affecting that permission following licence revocation or the cessation of sponsored employment.

Where a Certificate of Sponsorship has been assigned but the worker’s immigration application has not yet been decided, the loss of the sponsor’s licence may affect the application.

The precise consequences depend on the applicable Immigration Rules and the circumstances of the application.

Liquidators should therefore distinguish between unused CoS allocations, assigned Certificates of Sponsorship, pending immigration applications and workers who already hold permission.

These categories should not be treated as having identical legal consequences.

 

8. Can Unused Certificates of Sponsorship Be Sold to a Purchaser?

 

No. Unused Certificates of Sponsorship and CoS allocations cannot simply be sold or transferred as part of a company’s assets.

The authority to assign Certificates of Sponsorship arises from the sponsor licence held by the authorised legal entity.

Where the business is acquired by another organisation, the purchaser must establish its own sponsorship position.

The fact that the seller previously held an allocation of Certificates of Sponsorship does not entitle the purchaser to use that allocation.

Where sponsored employees transfer as part of a qualifying business transfer, the Home Office provides specific provisions concerning successor sponsorship.

Those provisions should not be confused with transferring the seller’s unused CoS allocation.

For example, a purchaser acquiring an insolvent company’s trading operations may wish to retain existing sponsored employees and recruit additional overseas workers.

The arrangements for existing transferring employees must be considered under the relevant business-transfer rules.

Any proposed new sponsorship must be undertaken through the purchaser’s appropriate Home Office authorisation.

The acquisition agreement cannot independently confer the seller’s sponsorship permissions on the purchaser.

 

9. What Happens to Sponsored Workers When the Business Closes?

 

Where liquidation results in the closure of the business, sponsored employees may lose their employment and the sponsorship on which their immigration permission depends.

For Skilled Workers, immigration permission is linked to employment with an authorised sponsor in an eligible role.

Where the sponsoring organisation’s licence is revoked or the employee’s sponsored employment ends, the Home Office may cancel or shorten the worker’s immigration permission in accordance with the applicable rules and policy.

The worker’s immigration permission does not necessarily expire automatically on the date liquidation begins.

However, the worker should not assume that they can remain in the UK until the original expiry date of their permission.

The Home Office’s cancellation decision, where one is issued, may determine the period available to obtain alternative immigration permission or leave the UK.

The commonly discussed 60-day period is not an automatic entitlement arising from liquidation or redundancy.

The worker’s existing permission, the reasons for cancellation and any relevant exceptions must be considered.

Liquidators should therefore avoid providing definitive immigration deadlines to affected employees without examining their circumstances.

Where possible, employees should be informed promptly about the termination of their employment and encouraged to obtain individual immigration advice.

The detailed consequences for sponsored workers are considered in Section E.

 

10. Do Sponsored Workers Have Redundancy Rights During Liquidation?

 

Sponsored workers may have employment rights arising from the termination of their employment during liquidation.

Their immigration status does not automatically exclude them from statutory employment protections.

Depending on their circumstances, employees may have entitlements relating to unpaid wages, accrued holiday pay, notice pay or statutory redundancy payments.

The availability and amount of these payments depend on the applicable employment law requirements, including eligibility conditions.

Where an employer is insolvent, eligible employees may be able to claim certain payments through the government’s statutory arrangements.

These employment rights must be distinguished from the employee’s immigration permission.

For example, a Skilled Worker may qualify for a statutory redundancy payment while also facing cancellation of their immigration permission because their sponsored employment has ended.

The existence of an employment law claim does not automatically preserve the worker’s right to remain in the UK.

Similarly, the loss of immigration sponsorship does not automatically extinguish the worker’s entitlement to pursue employment-related payments.

Liquidators should address the relevant employment obligations while recognising that sponsored employees may also require immigration advice.

 

11. Can a Business Be Sold During Liquidation?

 

A liquidator may sell business assets as part of the process of realising value for creditors.

Depending on the circumstances, the sale may involve premises, equipment, intellectual property, customer contracts or business operations.

Where the purchaser wishes to retain employees, including sponsored workers, the transaction must be assessed against the applicable employment and immigration requirements.

The seller’s sponsor licence does not transfer with the business assets.

The purchaser must establish whether it holds the necessary sponsorship authorisation and whether the Home Office business-transfer provisions apply.

The position may differ depending on whether the transaction involves a qualifying transfer of employment or ordinary recruitment of former employees.

The application of TUPE must also be considered carefully because the regulations contain specific provisions concerning insolvency proceedings.

It should not be assumed that every sale during liquidation attracts the same employment protection or immigration consequences as a business transfer during administration.

Where the relevant sponsorship transfer provisions do not apply, employees may need new sponsorship and immigration applications before beginning work for the purchaser.

For this reason, immigration due diligence should take place before completion wherever the purchaser intends to retain sponsored workers.

 

12. Does a Sale of Business Assets Preserve the Sponsor Licence?

 

No. The sale of a company’s business assets does not preserve or transfer the seller’s sponsor licence.

The licence belongs to the legal entity authorised by the Home Office.

Where the purchaser is a different legal entity, it cannot simply assume the seller’s sponsorship authorisation.

This remains the case where the purchaser continues operating from the same premises, uses the same trading name and retains many of the same employees.

Commercial continuity does not automatically establish sponsorship continuity.

The purchaser must consider the Home Office rules governing business transfers and the requirements applicable to the sponsored employees it intends to retain.

Where the relevant transfer conditions are satisfied, specific arrangements may allow the successor organisation to assume responsibility for sponsored workers without those workers making ordinary change-of-employer applications.

However, these provisions do not amount to a transfer of the seller’s licence.

The purchaser must satisfy the relevant licensing and reporting requirements.

Where the purchaser does not hold an appropriate sponsor licence, the applicable successor application requirements and deadlines must be considered.

The detailed position is addressed in Section F.

 

13. What Happens if a Company Permanently Ceases Trading?

 

Permanent cessation of trading can have significant consequences for an organisation’s ability to satisfy its sponsorship obligations.

A licensed sponsor must be an eligible organisation capable of meeting the requirements associated with sponsorship.

Where the business permanently closes, the organisation may no longer have the operational arrangements necessary to sponsor workers in the roles for which Certificates of Sponsorship were assigned.

The employer must consider the Home Office reporting requirements concerning business closure and the cessation of sponsored employment.

However, permanent cessation of trading should be distinguished from the formal commencement of liquidation.

Where the company has entered voluntary or compulsory liquidation, the specific provisions in paragraph C3.7 apply.

Where a business closes without immediately entering liquidation, the organisation must assess the relevant sponsor guidance concerning cessation of trading, surrender and organisational changes.

It should not assume that its sponsor licence can remain active indefinitely because the company continues to exist legally.

Where sponsored employees have been dismissed, the employer must also consider the applicable worker reporting obligations.

Directors should address these issues before abandoning the company’s sponsorship systems or allowing key personnel to leave without suitable arrangements.

 

14. Is Dissolution the Same as Sponsor Licence Revocation?

 

No. Dissolution and sponsor licence revocation are separate legal events.

Dissolution is the process through which a company ceases to exist as a legal entity.

Revocation is the withdrawal of sponsorship authorisation by the Home Office.

A company may lose its sponsor licence before it is formally dissolved.

For example, where a sponsoring organisation enters voluntary or compulsory liquidation, the Home Office guidance provides for revocation following the prescribed notification.

The company may nevertheless remain registered at Companies House while the liquidation process continues.

Conversely, the fact that a company remains registered does not establish that its sponsor licence is valid.

Employers, insolvency practitioners and purchasers should therefore verify the sponsorship position directly rather than relying solely on Companies House records.

The legal existence of the company and its authority to sponsor overseas workers must be considered separately.

 

15. Should an Insolvent Company Surrender Its Sponsor Licence?

 

An employer should not assume that voluntary surrender is the appropriate response to every insolvency event.

Surrender is the process through which an organisation voluntarily relinquishes its sponsor licence.

Revocation, by contrast, is action taken by the Home Office to withdraw the licence.

Where a company enters voluntary or compulsory liquidation, the Home Office guidance expressly provides for revocation.

The organisation must therefore comply with the specific liquidation notification requirements rather than assuming that voluntary surrender is an alternative to those provisions.

Where a business is permanently closing outside formal liquidation, the appropriate course of action must be assessed under the relevant sponsor guidance.

The employer should consider whether the licence must be surrendered, whether the Home Office has grounds to revoke it and what outstanding obligations remain.

Surrender should not be viewed as a means of avoiding scrutiny of previous compliance failures.

Nor does surrender automatically resolve the immigration consequences for sponsored workers.

The organisation should establish the appropriate procedure and address any outstanding Home Office notifications before taking action.

 

16. What if the Company Has Outstanding Sponsor Compliance Breaches?

 

Liquidation does not automatically remove the regulatory significance of sponsorship breaches that occurred before the insolvency proceedings.

For example, a company may have failed to report changes affecting sponsored employees, maintained incomplete records or paid workers below the applicable sponsorship requirements.

These matters may remain relevant to the Home Office’s assessment of the organisation’s sponsorship history.

The liquidator should identify any outstanding Home Office correspondence, compliance investigations or enforcement action.

Relevant records should be preserved where required.

However, the existence of historic breaches should not be confused with the separate liquidation provisions requiring licence revocation.

The Home Office may have different grounds for taking enforcement action, and the consequences depend on the circumstances and applicable rules.

Where directors or other individuals intend to establish a new sponsoring organisation following the liquidation, previous sponsorship compliance history may also require consideration under the relevant eligibility and suitability requirements.

The precise implications depend on the individuals, organisations and conduct involved.

It should not be assumed that liquidation automatically eliminates all historic sponsorship compliance concerns.

 

17. Can Former Directors Establish a New Company and Sponsor the Same Workers?

 

Former directors of an insolvent company may seek to establish a new business that undertakes similar activities or acquires assets from the insolvent organisation.

However, the new company does not automatically inherit the former employer’s sponsor licence.

It must establish whether it requires a new sponsor licence and whether it satisfies the applicable Home Office eligibility and suitability requirements.

Where the new company acquires a business and its employees through a qualifying transfer, the relevant successor sponsorship provisions must be considered.

Where former employees are recruited independently after their employment with the insolvent company has ended, ordinary sponsorship and change-of-employer immigration requirements may apply.

The distinction is important because the immigration consequences depend on the legal structure and timing of the arrangements.

For example, a new company formed by former directors may acquire equipment and customer contracts from a liquidator but recruit employees separately.

That arrangement should not automatically be treated as a qualifying transfer of sponsored workers.

The Home Office may also consider relevant previous sponsorship compliance history when assessing the new organisation’s application.

Former directors should therefore obtain advice before assuming that they can resume sponsorship through a newly incorporated company.

 

18. Liquidation Sponsor Licence Checklist

 

Liquidators and employers should address the following matters where a sponsoring organisation enters liquidation.

 

Action	Reason
Confirm the date liquidation commenced.	Identify the event triggering the Home Office notification requirement.
Identify the sponsoring legal entity and licence details.	Establish which organisation holds the sponsor licence.
Notify the Home Office within 20 working days.	Comply with paragraph C3.7 of the sponsor guidance.
Use the alternative notification procedure where SMS access is unavailable.	Ensure the Home Office receives the required information.
Recognise that the Home Office will revoke the licence.	Plan for the loss of sponsorship authorisation.
Identify all sponsored workers.	Assess employment and immigration consequences.
Record redundancies and employment termination dates.	Address worker reporting and maintain accurate records.
Review assigned and unused Certificates of Sponsorship.	Identify affected workers and pending immigration matters.
Preserve sponsorship and payroll records.	Maintain evidence relevant to compliance and employment obligations.
Assess any proposed business or asset sale.	Identify purchaser licensing and successor sponsorship requirements.
Review outstanding Home Office correspondence.	Identify existing compliance concerns or enforcement matters.
Communicate accurately with affected employees.	Avoid misleading assurances about immigration permission or cancellation periods.

 

The checklist should be applied alongside the relevant insolvency, employment and immigration requirements.

Where the business employs a significant number of sponsored workers, early identification of immigration issues may be particularly important for managing redundancies or negotiating a sale.

 

19. Why Liquidation Requires Early Immigration Planning

 

Liquidation can result in the rapid termination of employment, closure of business premises and loss of access to administrative systems.

For a licensed sponsor, these developments can make it difficult to comply with outstanding Home Office obligations unless immigration matters are addressed early.

The Home Office guidance establishes a clear requirement to notify voluntary or compulsory liquidation within 20 working days and provides for revocation of the sponsor licence.

The organisation must therefore plan for the consequences of losing sponsorship authorisation.

This includes identifying sponsored workers, preserving relevant records, addressing employment termination reports and considering the immigration implications of any proposed business sale.

Where a purchaser intends to retain employees, the successor sponsorship requirements should be assessed before completion.

Where the business is closing permanently, affected workers may need to consider alternative sponsorship or other immigration options.

Liquidators should avoid assuming that the immigration position is resolved simply because the company’s employment contracts have ended or its assets have been sold.

Employment termination, sponsor licence revocation and the cancellation of individual immigration permission are distinct legal matters.

Addressing them together can help the liquidator manage outstanding obligations and reduce avoidable risks for the organisation and its sponsored workforce.

 

 

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Section D: Home Office Reporting, Sponsor Compliance and Right to Work During Insolvency

 

1. What Are an Insolvent Employer’s Home Office Reporting Obligations?

 

Employers holding a UK sponsor licence must continue to address their Home Office reporting obligations when experiencing financial distress or entering formal insolvency proceedings.

The reporting requirements depend on the nature of the event, the organisation’s licence status and whether the change affects the sponsoring business, its sponsored workers or both.

The Home Office sponsor guidance distinguishes between organisational changes and changes affecting individual sponsored employees.

Organisational changes may include administration, liquidation, company voluntary arrangements, changes in ownership, business transfers and the cessation of trading.

Worker-related changes may include the termination of sponsored employment, certain changes to job duties, salary reductions, changes in work location and other circumstances specified in the sponsor guidance.

These categories should be considered separately because reporting one event does not necessarily satisfy the obligation to report another.

For example, an employer entering administration must address the specific requirement to notify the Home Office within 20 working days. If the administrator subsequently makes sponsored workers redundant, the termination of their employment may create additional worker reporting obligations.

Similarly, where a company is sold during administration, the transaction may trigger separate requirements under the Home Office business-transfer provisions.

Employers and insolvency practitioners should therefore maintain an accurate record of relevant events and assess the applicable reporting obligations as each event occurs.

 

2. What Are the Home Office Reporting Deadlines During Insolvency?

 

The Home Office sponsor guidance establishes specific reporting requirements for different insolvency procedures.

Under section C3 of the Workers and Temporary Workers sponsor guidance, an organisation entering administration or administrative receivership must notify the Home Office within 20 working days.

A company entering a company voluntary arrangement must notify the Home Office within 20 working days of the arrangement being agreed.

Where the organisation enters voluntary or compulsory liquidation, it must notify the Home Office within 20 working days of entering liquidation.

These requirements should not be confused with the general reporting periods applicable to other sponsorship events.

Many changes affecting individual sponsored workers are subject to a 10-working-day reporting requirement, while various organisational changes are subject to a 20-working-day period.

However, the applicable event and deadline must be established from the relevant sponsor guidance rather than assuming that a general deadline applies to every circumstance.

Insolvency practitioners should identify the relevant dates immediately following appointment, particularly where the company has already experienced management changes, redundancies or operational disruption.

 

3. Insolvency Reporting Requirements by Event

 

The following table summarises the principal reporting considerations for an organisation holding a sponsor licence.

 

Event	Reporting requirement	Practical consideration
Administration	Notify the Home Office within 20 working days.	Inform the administrator about the sponsor licence and arrange the required Authorising Officer appointment.
Administrative receivership	Notify the Home Office within 20 working days.	Apply the relevant insolvency practitioner and key personnel requirements.
CVA agreed	Notify the Home Office within 20 working days of the agreement.	Establish whether ownership changes and whether the licence can continue.
Voluntary liquidation	Notify the Home Office within 20 working days of entering liquidation.	The Home Office guidance provides for licence revocation.
Compulsory liquidation	Notify the Home Office within 20 working days of entering liquidation.	Address revocation and the consequences for sponsored workers.
Change in ownership	Apply the specific ownership-change reporting requirements.	Establish whether the existing licence will be revoked and whether a successor licence is required.
Business transfer	Apply the relevant reporting and successor sponsorship provisions, including applicable 20-working-day requirements.	Confirm the purchaser’s sponsorship authorisation and the position of transferring workers.
Sponsored worker made redundant	Report the cessation of sponsorship within the applicable worker reporting period, generally 10 working days.	Record the employment termination date and consider the worker’s immigration position.
Sponsored worker’s salary or duties change	Assess whether the change is reportable and whether the sponsored role remains compliant.	Do not assume that a contractual variation is permitted under immigration law.
Business permanently closes	Apply the relevant organisational and worker reporting provisions.	Establish the appropriate licence closure, surrender or revocation process.

 

The table is a practical overview. Employers must apply the specific Home Office requirements governing the relevant event, including any additional conditions or procedures.

 

4. Who Is Responsible for Reporting Changes During Administration?

 

When a sponsoring organisation enters administration, the appointed insolvency practitioner assumes an important role in addressing the company’s sponsorship obligations.

Under paragraph C3.2 of the Home Office sponsor guidance, the administrator or administrative receiver must be appointed as the organisation’s Authorising Officer.

The necessary changes must be made using the prescribed Home Office procedure.

Where the existing Level 1 User remains available, that individual may undertake authorised SMS functions in accordance with their permissions.

Where the existing Level 1 User is not retained, the insolvency practitioner must follow the applicable change of circumstances procedure to obtain the necessary access and arrange their appointment.

The administrator should establish who is responsible for preparing and submitting Home Office notifications.

In larger organisations, the practical work may be undertaken by an authorised HR or immigration compliance employee.

However, the insolvency appointment does not remove the need for accurate sponsorship governance.

The administrator should ensure that relevant events are identified, the correct reporting procedure is followed and evidence of notifications is retained.

Where specialist immigration advisers are involved, the division of responsibilities should be documented to avoid missed deadlines or duplicated reporting.

 

5. What Happens if the Authorising Officer or Level 1 User Leaves?

 

Financial distress and insolvency proceedings frequently result in senior management changes and the departure of HR personnel.

These changes can affect the organisation’s ability to manage its sponsor licence.

Where the company enters administration, the specific Home Office requirement for the insolvency practitioner to become Authorising Officer must be addressed.

Where an existing Level 1 User leaves, the organisation must follow the appropriate procedure for changing its authorised SMS users.

It should not continue using an account belonging to a former employee.

The Home Office’s September 2026 SMS security changes, including mandatory multi-factor authentication, make it particularly important to ensure that authorised users retain legitimate access.

Administrators should identify any inactive accounts and establish whether the organisation has suitable personnel able to undertake necessary reporting functions.

Where access cannot be restored immediately, the relevant Home Office guidance should be consulted to determine the appropriate alternative reporting procedure.

In liquidation, paragraph C3.7 specifically provides an alternative notification route through the Sponsorship Compliance Team where the SMS cannot be accessed.

The organisation should not assume that loss of access removes its reporting obligations.

 

6. Must Redundancies Be Reported to the Home Office?

 

Where a sponsored employee is made redundant, the employer must consider its obligation to report the termination of sponsored employment.

Under the sponsor guidance, the cessation of sponsorship is generally a reportable worker event subject to a 10-working-day reporting period.

This obligation is separate from the employer’s duties under employment law.

For example, an administrator may make a group of employees redundant as part of an operational restructuring.

Where some of those employees are sponsored Skilled Workers, the employer must identify the affected individuals and address the required sponsorship notifications.

The employer should retain accurate records of the employment termination dates and the relevant reporting actions.

Reporting redundancy does not itself cancel the worker’s immigration permission.

The Home Office may subsequently take action affecting that permission in accordance with the applicable Immigration Rules and cancellation policy.

The employer should therefore avoid informing workers that their visas automatically expire on their final day of employment.

Equally, it should not assure them that their permission will remain valid until its original expiry date regardless of the loss of sponsorship.

Sponsored workers should be given accurate information about the employment decision and encouraged to obtain individual immigration advice where appropriate.

 

7. Must Salary Reductions and Changes to Working Hours Be Reported?

 

Insolvent employers may seek to reduce employment costs by changing salaries, working hours or job responsibilities.

Where sponsored employees are affected, the proposed changes must be assessed against the relevant immigration requirements.

For example, a Skilled Worker may have obtained immigration permission on the basis of a particular occupation and salary.

A reduction in salary could mean that the employee no longer satisfies the requirements applicable to their sponsored employment.

Similarly, a change in working hours may affect the worker’s salary position or create a reporting obligation.

Employers should not assume that an employee’s agreement to a contractual variation makes the change compliant with immigration law.

The relevant sponsor guidance and Immigration Rules must be considered.

Where a change is permitted, the employer must establish whether it is reportable.

Where the proposed arrangements would breach the applicable sponsorship requirements, the employer should consider lawful alternatives before implementing the change.

This is particularly important during administration, where salary reductions may be proposed urgently to preserve cash flow.

 

8. What Sponsorship Records Must Be Preserved During Insolvency?

 

Insolvency proceedings can disrupt the systems used to maintain sponsorship records.

Business premises may close, IT services may be terminated and employees responsible for immigration compliance may leave.

These developments can make it difficult to demonstrate compliance with the Home Office’s record-keeping requirements.

Employers and insolvency practitioners should therefore identify and preserve relevant sponsorship records at an early stage.

These may include:

 

• Sponsor licence details and Home Office correspondence.
• Certificates of Sponsorship assigned to workers.
• Evidence of sponsored workers’ immigration status and right to work checks.
• Employment contracts and job descriptions.
• Salary, payroll and working-hours records.
• Records of employee absences and relevant monitoring activity.
• Details of work locations and changes to sponsored employment.
• SMS reports and records of Home Office notifications.
• Details of the organisation’s sponsorship key personnel.
• Documents concerning redundancies, business transfers and changes in ownership.

 

The applicable retention requirements depend on the type of record and the relevant Home Office guidance.

Records should also be handled in accordance with data protection obligations.

Where a business is sold, the parties should establish what information the purchaser requires to satisfy its own obligations and what records must remain available to the insolvent organisation.

Records should not simply be deleted when employees leave or premises close.

 

9. Do Right to Work Obligations Continue During Insolvency?

 

Yes. Insolvency does not automatically remove an organisation’s obligations under the UK’s right to work framework.

Where a company continues employing or engaging individuals during administration, it must consider the applicable statutory checking requirements.

Right to work compliance should be distinguished from sponsor licence compliance.

A sponsor licence authorises an eligible organisation to sponsor workers under specified immigration routes.

Right to work checks concern whether an individual has permission to undertake the relevant work in the UK and whether the organisation can establish a statutory excuse against liability for employing or engaging someone without the required permission.

An employer may therefore have right to work obligations concerning individuals who do not require immigration sponsorship.

Conversely, the Home Office sponsor guidance requires sponsors to check the right to work of their sponsored workers, including where the particular working relationship falls outside the statutory right to work checking framework.

Administrators should therefore consider both regimes when reviewing the workforce.

Where employees are retained during administration, the organisation should maintain appropriate right to work records and complete any required follow-up checks.

Where a purchaser takes over business operations, it must establish its own checking responsibilities and should not assume that the seller’s compliance arrangements automatically satisfy them.

 

10. What Changed to Right to Work Checks on 1 October 2026?

 

Changes to the UK’s right to work framework took effect on 1 October 2026, extending the statutory checking regime beyond conventional employment arrangements.

The revised framework applies to specified additional working relationships, including certain worker contracts, individual subcontracting arrangements and relevant online matching services.

The changes are particularly relevant to employers undergoing insolvency or restructuring because businesses may seek to replace conventional employment arrangements with alternative forms of engagement.

For example, an insolvent company may reduce its directly employed workforce and engage individuals through subcontracting arrangements to complete outstanding contracts.

Under the expanded framework, the fact that an individual is described as self-employed or engaged as a subcontractor does not necessarily mean that the organisation has no statutory right to work checking obligations.

The legal nature of the arrangement and the relevant statutory provisions must be considered.

Similarly, a purchaser acquiring an insolvent business may reorganise its workforce using different contractual arrangements.

The purchaser must establish whether the expanded right to work regime applies to those arrangements.

Employers should not assume that changing the contractual label from employee to contractor removes the requirement to establish an individual’s right to work.

The October 2026 reforms should therefore be incorporated into insolvency-related workforce planning and immigration compliance reviews.

 

11. Do Right to Work Checks Apply to Subcontractors After 1 October 2026?

 

Following the 1 October 2026 reforms, specified individual subcontracting arrangements fall within the expanded statutory right to work framework.

This does not mean that every commercial subcontracting arrangement is treated identically.

The relevant statutory definitions and the nature of the working relationship must be considered.

For example, an administrator may engage an individual subcontractor to assist with maintaining business operations during administration.

The administrator should establish whether the arrangement falls within the expanded checking requirements and what checks must be undertaken.

Similarly, a purchaser may engage former employees as individual contractors rather than transferring their employment contracts.

The purchaser should not assume that the absence of an employment contract removes all right to work checking responsibilities.

Where the expanded statutory framework applies, the organisation must follow the prescribed checking requirements to establish the relevant statutory excuse.

The position should be assessed according to the actual contractual and working arrangements rather than the terminology used in commercial documents.

This is especially important where restructuring involves outsourcing, individual subcontracting or other changes to the workforce model.

 

12. What Are the Right to Work Rules for Online Matching Services?

 

The 1 October 2026 changes also extend the statutory right to work framework to specified online matching services.

These provisions concern relevant arrangements in which an online service connects individuals providing services with customers.

The precise obligations depend on whether the service and working arrangements fall within the statutory definitions.

This may be relevant where an insolvent business operates an online platform or where a purchaser acquires a business whose activities involve matching individual service providers with customers.

The organisation should establish whether the expanded regime applies and what verification responsibilities arise.

The changes should not be interpreted as imposing identical obligations on every website, recruitment platform or online marketplace.

The statutory scope and applicable guidance must be considered.

Where a business operates within the relevant framework, right to work compliance should form part of the administrator’s or purchaser’s regulatory due diligence.

 

13. What Digital Right to Work Verification Rules Apply from October 2026?

 

The October 2026 changes also affect the framework governing digital right to work verification.

Employers must distinguish between the Home Office online right to work checking service and digital verification services provided by third parties.

The Home Office online service is used to establish an individual’s right to work in circumstances where that checking method is available and appropriate.

Third-party digital verification services operate under a separate framework, including applicable certification and registration requirements.

Where an organisation relies on a digital verification service to establish a statutory excuse, it must ensure that the provider satisfies the requirements applicable to that service.

Employers should not assume that every commercial identity verification product can be used for statutory right to work checking purposes.

Equally, the October 2026 changes do not mean that every right to work check must be completed through a commercial digital verification provider.

The appropriate checking method depends on the individual’s circumstances and the applicable Home Office requirements.

Administrators should review the checking systems used by the business, particularly where HR functions have been outsourced or the organisation relies on a third-party verification provider.

Purchasers should also establish whether inherited checking processes comply with the rules in force at the time the checks are undertaken.

 

14. What Happens to Existing Right to Work Checks When a Business Is Sold?

 

Where a business transfers to another organisation, the purchaser must establish its own right to work checking responsibilities.

The position depends on the nature of the transaction, the employees or workers involved and the applicable Home Office guidance.

On a qualifying TUPE transfer, the purchaser obtains the benefit of any statutory excuse established by the transferor, but can inherit exposure where the original check was defective. The Home Office therefore advises fresh checks and allows a 60-calendar-day grace period from the transfer in which to complete them. The grace period does not extend the deadline for any subsequent follow-up check.

Where individuals are recruited independently rather than transferred under TUPE, the ordinary right to work checking requirements may apply.

The October 2026 expansion of the statutory framework also means that purchasers should consider whether newly established worker or subcontracting arrangements fall within the checking regime.

For example, a purchaser may acquire the assets of an insolvent company and engage former employees under new contracts.

Whether those individuals require new checks, and the method of checking, will depend on the legal arrangements and applicable guidance.

Right to work due diligence should therefore be considered alongside sponsor licence due diligence before completion.

 

15. Can an Employer Rely on Historic Right to Work Checks?

 

An employer may be able to rely on a right to work check previously undertaken in accordance with the applicable statutory requirements, subject to the relevant conditions.

However, the organisation must establish whether the check was valid, whether any follow-up check is required and whether the individual’s circumstances have changed.

For example, an employee with time-limited immigration permission may require a follow-up check in accordance with the Home Office’s prescribed procedures.

Where the organisation has lost access to its HR records during insolvency, it may be unable to demonstrate that an appropriate check was completed.

The absence of records can therefore create compliance risks even where the individual has permission to work.

Administrators should preserve right to work evidence and identify any outstanding follow-up requirements.

Where records are incomplete, the organisation should establish the appropriate corrective steps under the current Home Office guidance.

The October 2026 reforms also introduce changes affecting specified digital verification and evidential arrangements.

Employers should therefore apply the checking rules in force at the relevant time rather than assuming that historic procedures remain unchanged.

 

16. Can Insolvency Lead to Illegal Working Penalties?

 

Insolvency does not automatically protect an organisation from liability under the UK’s illegal working framework.

Where an employer or other organisation falls within the applicable statutory regime, failures to comply with the relevant right to work requirements may expose it to enforcement action.

The consequences depend on the statutory provisions, the individual’s immigration position and the organisation’s conduct.

Right to work checks are important because completing the prescribed check can establish a statutory excuse against a civil penalty in the circumstances covered by the legislation.

However, the existence of a sponsor licence does not itself establish that the organisation has completed the required right to work checks.

Similarly, insolvency does not automatically cure historic failures.

Administrators should identify any outstanding illegal working investigations, civil penalty notices or Home Office enquiries.

Where a purchaser acquires a business, it should consider relevant workforce compliance risks and establish its own obligations.

These matters should be assessed separately from the sponsor licence consequences of administration or liquidation.

For more detailed guidance, see DavidsonMorris’ Right to Work Checks and Illegal Working resources.

 

17. Can the Home Office Investigate a Sponsor During Insolvency?

 

The Home Office may undertake sponsorship compliance activity where an organisation remains subject to the sponsor licensing regime.

Insolvency does not automatically remove the regulatory significance of earlier sponsorship failures.

For example, an employer may have failed to report sponsored worker absences, maintained incomplete records or paid workers below the applicable immigration salary requirements before entering administration.

These matters may remain relevant to the Home Office’s assessment of the organisation’s compliance history.

Administrators should therefore establish whether the company is subject to an existing Home Office investigation, compliance visit, licence suspension or other enforcement action.

Where the organisation remains licensed, it must continue complying with the applicable sponsor duties.

Where liquidation results in licence revocation, outstanding matters may still require consideration according to the circumstances.

Insolvency practitioners should preserve relevant records and avoid making inaccurate statements about the organisation’s previous sponsorship activities.

Where the business is being sold, the purchaser should consider whether historic compliance concerns affect the proposed transaction or its own sponsorship arrangements.

 

18. What Should an Insolvency Compliance Register Include?

 

Employers and insolvency practitioners should maintain a structured record of immigration compliance actions during insolvency proceedings.

A compliance register can help identify reporting deadlines, allocate responsibility and preserve evidence of actions taken.

The register should distinguish between organisational changes, worker-related events, right to work matters and proposed business transfers.

 

Record	Information to capture
Insolvency event	Type of procedure, commencement date and appointed practitioner.
Sponsor licence	Licence details, authorised routes and current Home Office status.
Organisational reporting	Reportable event, applicable deadline, responsible person and submission evidence.
Key personnel	Authorising Officer, Key Contact, Level 1 User and required changes.
SMS access	Authorised users, access issues and actions required to maintain reporting capability.
Sponsored workforce	Sponsored workers, immigration routes, employment arrangements and relevant CoS records.
Worker reporting	Redundancies, employment changes, reportable absences and submission dates.
Right to work	Checking records, applicable methods, follow-up dates and any outstanding issues.
Business transfers	Purchaser details, transfer dates, licensing requirements and Home Office notifications.
Compliance concerns	Historic breaches, outstanding Home Office correspondence and remedial action.
Employee communications	Information provided to affected sponsored workers and relevant dates.

 

The register should be reviewed whenever a significant insolvency or workforce event occurs.

Responsibility for individual actions should be allocated clearly, particularly where the administrator, HR personnel and external advisers are all involved.

Maintaining a register does not replace the underlying legal obligations, but it can help reduce the risk of missed notifications and incomplete records.

 

19. Home Office Compliance Checklist for Insolvent Employers

 

The following checklist provides a practical framework for employers and insolvency practitioners.

 

1. Identify the insolvency procedure. Establish whether the organisation is entering administration, a CVA, liquidation or another arrangement.
2. Confirm the sponsor licence position. Identify the sponsoring legal entity, licence status and relevant Home Office provisions.
3. Record reporting deadlines. Apply the specific insolvency notification requirements and identify any additional organisational or worker reporting obligations.
4. Address sponsorship key personnel. Where administration applies, arrange the mandatory appointment of the insolvency practitioner as Authorising Officer.
5. Secure authorised SMS access. Identify the Level 1 User and resolve any access or authentication problems through the prescribed procedures.
6. Identify sponsored workers. Review Certificates of Sponsorship, employment contracts, salary arrangements and immigration records.
7. Review proposed employment changes. Assess redundancies, salary reductions, working-hours changes and changes to job duties.
8. Preserve sponsorship records. Retain the documents required to demonstrate compliance and respond to Home Office enquiries.
9. Review right to work compliance. Identify checking obligations, outstanding follow-up checks and the effect of the 1 October 2026 reforms.
10. Assess business transfers. Establish purchaser licensing requirements and the immigration consequences for transferring workers.
11. Document notifications and decisions. Maintain evidence of reporting, advice and actions taken.
12. Coordinate specialist advice. Ensure that insolvency, employment and immigration requirements are addressed consistently.

 

The checklist should be adapted to the organisation’s circumstances and the relevant Home Office requirements.

Where a business employs sponsored workers in essential roles, early compliance planning may also be important to the commercial viability of a rescue or acquisition.

 

20. Why Right to Work and Sponsor Compliance Must Be Considered Together

 

Insolvency proceedings can create overlapping immigration compliance responsibilities.

Sponsor licence rules govern the organisation’s authority to sponsor overseas workers and its continuing obligations towards those workers.

Right to work rules govern the checks and related requirements applicable to individuals undertaking work in the UK.

The two regimes are connected but legally distinct.

For example, a purchaser acquiring an insolvent business may need to establish whether it can assume sponsorship responsibility for transferred Skilled Workers.

At the same time, it must consider the right to work checking requirements applicable to its workforce.

Where the purchaser engages individuals under new contractual arrangements, the expanded statutory framework effective from 1 October 2026 may also be relevant.

Similarly, an administrator continuing to operate a business must consider both the organisation’s sponsorship obligations and its responsibilities under the right to work regime.

The fact that an individual has a valid visa does not automatically demonstrate that the organisation has completed the prescribed right to work checks.

Equally, completing a right to work check does not establish that a company is authorised to sponsor workers under the Skilled Worker route.

Employers and insolvency practitioners should therefore address both areas as part of a coordinated workforce compliance review.

This can help identify regulatory risks, support lawful workforce continuity and inform decisions about restructuring, redundancy and business transfers.

 

 

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Section E: Consequences of Insolvency for Sponsored Workers

 

1. What Happens to Sponsored Workers When Their Employer Becomes Insolvent?

 

When a UK employer holding a sponsor licence becomes insolvent, employees sponsored under the Skilled Worker or another sponsored work route may face consequences for both their employment and immigration permission.

The outcome depends on the insolvency procedure, the sponsor licence status, whether employment continues and whether another organisation assumes sponsorship responsibility.

Insolvency does not necessarily mean that every sponsored worker immediately loses their immigration permission.

However, where the employer’s sponsor licence is revoked or sponsored employment ends, the Home Office may take action affecting the worker’s permission to remain in the UK.

For example, a company entering administration may continue trading while the administrator assesses whether the business can be rescued or sold. Sponsored workers may remain employed during that period, subject to the applicable sponsorship requirements.

By contrast, where a company enters voluntary or compulsory liquidation, the Home Office sponsor guidance provides for revocation of its sponsor licence.

The consequences for employees must then be considered under the relevant Immigration Rules and Home Office cancellation policy.

Where the business is acquired by another organisation, qualifying business-transfer provisions may allow sponsored workers to continue their employment under a successor sponsor without making an ordinary change-of-employer application.

These different scenarios should not be treated as having identical immigration consequences.

Employers and insolvency practitioners should therefore identify sponsored workers early and establish how the proposed insolvency arrangements affect their sponsorship.

 

2. Does Insolvency Automatically Cancel a Skilled Worker Visa?

 

No. The commencement of insolvency proceedings does not, by itself, necessarily mean that every sponsored employee’s Skilled Worker permission is immediately cancelled.

The immigration consequences depend on the relevant events and the applicable Immigration Rules.

These events may include the termination of sponsored employment, the withdrawal of sponsorship, revocation of the employer’s sponsor licence or a transfer of employment to another organisation.

The Home Office may cancel or shorten a worker’s immigration permission where the relevant cancellation grounds apply.

However, the cancellation of immigration permission is distinct from the employer entering insolvency proceedings.

For example, a Skilled Worker may remain employed by a company during administration while the organisation continues to meet the relevant sponsorship requirements.

The worker’s position is different from that of an employee whose sponsoring employer has entered liquidation and had its licence revoked.

Similarly, where a worker transfers to an appropriately licensed successor under the relevant business-transfer provisions, the worker may be able to continue without an ordinary change-of-employer application.

Employees should therefore not assume that their visas automatically expire on the date administration or liquidation begins.

Equally, they should not assume that their immigration permission remains unaffected until its original expiry date.

The worker’s individual circumstances and any Home Office decision must be considered.

 

3. What Happens When the Sponsor Licence Is Revoked?

 

Revocation removes the employer’s authorisation to sponsor workers under the relevant immigration routes.

Where the Home Office revokes a sponsor licence, the organisation can no longer rely on that licence to undertake sponsorship activity.

Existing sponsored workers may also face consequences for their immigration permission.

Where the licence is revoked and the worker was not actively or knowingly complicit in the reasons for revocation, the Home Office will normally shorten permission to 60 calendar days if more than 60 days remain. Where 60 days or less remain, permission will normally not be shortened further. Where the worker was actively and knowingly complicit, the Home Office will normally cancel all remaining permission.

The 60-day period is not calculated automatically from the insolvency, redundancy or licence revocation date. It runs from the effective date of the Home Office cancellation decision.

Workers should obtain individual immigration advice where their sponsor’s licence has been revoked.

 

4. Do Sponsored Workers Automatically Get 60 Days to Find Another Employer?

 

No. Sponsored workers do not automatically receive a fresh 60-day period from the date their employer becomes insolvent, their employment ends or the sponsor licence is revoked.

The commonly discussed 60-day period relates to Home Office cancellation policy in specified circumstances.

It should not be treated as a universal entitlement.

Where the licence is revoked and the worker was not actively or knowingly complicit in the reasons for revocation, the Home Office will normally shorten permission to 60 calendar days if more than 60 days remain. Where 60 days or less remain, permission will normally not be shortened further. Where the worker was actively and knowingly complicit, the Home Office will normally cancel all remaining permission.

A worker who has less than 60 days remaining should not assume that the loss of sponsorship extends their stay.

Similarly, the period should not be calculated automatically from the date of redundancy or the commencement of liquidation.

The worker must establish the position arising from their existing immigration permission and any Home Office cancellation decision.

Employers and insolvency practitioners should therefore avoid telling affected workers that they have a guaranteed 60 days to find another sponsor.

Where immigration permission may be affected, workers should be encouraged to obtain advice promptly.

 

5. When Does the 60-Day Period Start?

 

Where the Home Office shortens permission to 60 calendar days, the period runs from the effective date of the cancellation decision, not from the employee’s final working day, the administrator’s appointment or the date the company entered liquidation.

For example, an employee may be made redundant before the Home Office takes any action concerning their immigration permission.

The employment termination and any subsequent cancellation decision are separate events.

Similarly, the Home Office may revoke an employer’s sponsor licence before communicating a cancellation decision to an affected worker.

The worker should establish the effective date of any cancellation and the date until which their permission remains valid.

Where no cancellation decision has been received, the worker should not assume that the Home Office has granted an additional period of permission.

Employees should continue to comply with the conditions of their existing immigration permission and obtain advice before beginning alternative employment or making travel arrangements.

 

6. Can a Sponsored Worker Remain in the UK After Redundancy?

 

A sponsored worker who is made redundant may be able to remain in the UK while their existing immigration permission remains valid, subject to the applicable Immigration Rules and any Home Office cancellation decision.

However, the termination of sponsored employment can create grounds for the Home Office to cancel or shorten that permission.

The worker should therefore consider their immigration options promptly.

Possible options may include obtaining sponsorship from another licensed employer, applying under another immigration route where eligible or making arrangements to leave the UK.

The appropriate course depends on the worker’s circumstances, including their existing immigration permission, eligibility for another route and any relevant deadlines.

Where the worker wishes to remain under the Skilled Worker route, they will generally need a qualifying job offer from an appropriately licensed sponsor and a new Certificate of Sponsorship.

They will also generally need to apply to update their immigration permission before beginning the new sponsored employment.

The worker should not assume that a new job offer alone permits them to begin working for a different employer.

The applicable change-of-employer requirements must be satisfied.

 

7. Can a Skilled Worker Move to Another Licensed Sponsor?

 

Yes. A Skilled Worker whose employment ends because of insolvency may be able to move to another employer holding the appropriate sponsor licence.

The new employer must be authorised to sponsor workers under the relevant immigration route.

The proposed employment must also satisfy the applicable immigration requirements, including those concerning the occupation, salary and other eligibility criteria.

Where the move is an ordinary change of sponsoring employer, the new employer will generally need to assign a Certificate of Sponsorship.

The worker must then make the required application to update their immigration permission.

For example, a sponsored engineer made redundant during liquidation may obtain an offer from another licensed engineering business.

The new employer must establish that the proposed role qualifies for sponsorship and assign the appropriate Certificate of Sponsorship.

The employee must satisfy the applicable immigration application requirements before starting the new sponsored role.

The fact that the worker previously held Skilled Worker permission does not automatically authorise employment with the new sponsor.

Where the new employer acquires the insolvent business and the worker transfers under qualifying business-transfer arrangements, different provisions may apply.

These are considered separately in Section F.

 

8. Can a Sponsored Worker Start a New Job Before Their Visa Is Updated?

 

A Skilled Worker changing sponsoring employers must comply with the relevant immigration conditions governing the new employment.

An ordinary change of sponsoring employer generally requires a new Certificate of Sponsorship and an application to update the worker’s immigration permission.

The worker should not assume that submitting an application automatically permits them to begin the new sponsored role.

The applicable rules concerning when the new employment may commence must be followed.

For example, a worker made redundant by an insolvent sponsor may receive an immediate job offer from another licensed employer.

Although the new employer may wish the individual to start quickly, the immigration requirements must be satisfied before the worker begins employment that is not otherwise permitted.

The new employer must also undertake the applicable right to work checks.

Where the worker’s immigration application is pending, the appropriate checking procedure depends on their circumstances and the relevant Home Office guidance.

Employers should not assume that a Certificate of Sponsorship, a job offer or evidence of an application is sufficient in every case.

The position should be established before employment begins.

 

9. Can Sponsored Workers Transfer to a Purchaser of the Insolvent Business?

 

Sponsored workers may be able to transfer to a purchaser of an insolvent business under the Home Office’s business-transfer provisions.

These arrangements are particularly relevant where a business is sold during administration or as part of a corporate rescue.

Where the relevant conditions are satisfied, workers transferring under TUPE or similar protection may be able to continue their employment without making an ordinary change-of-employer immigration application.

However, the seller’s sponsor licence does not transfer to the purchaser.

The purchaser must establish its own sponsorship authorisation and satisfy the applicable successor sponsorship requirements.

Where the purchaser already holds an appropriate sponsor licence, it must address the relevant reporting and responsibility requirements.

Where the purchaser does not hold the necessary authorisation, the Home Office guidance provides specific application requirements and deadlines.

Under the applicable provisions, a successor may need to apply for a sponsor licence or extend its existing licence within 20 working days of the transfer.

If the required valid application is not made within 20 working days, or the application is refused, the transferred workers will have their immigration permission cancelled, except any workers who can be sponsored under an appropriate existing licence held by the incoming organisation.

The parties should therefore establish the sponsorship position before completing the transaction.

The fact that employees continue performing the same work at the same premises does not independently establish that the immigration requirements have been satisfied.

 

10. Does TUPE Automatically Protect a Sponsored Worker’s Visa?

 

No. TUPE and immigration sponsorship operate under separate legal frameworks.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 may protect certain employment rights where a qualifying business transfer occurs.

However, TUPE does not automatically transfer the seller’s sponsor licence to the purchaser.

The Home Office has separate provisions governing the sponsorship of workers affected by qualifying business transfers.

Where those provisions apply and the relevant conditions are satisfied, a sponsored worker may be able to continue working for the successor organisation without an ordinary change-of-employer immigration application.

However, the successor must satisfy the applicable licensing, reporting and sponsorship responsibility requirements.

The position is particularly important during insolvency because TUPE contains specific rules affecting transfers in certain insolvency proceedings.

It should not be assumed that every sale of an insolvent business produces the same employment or immigration consequences.

For example, a business sale during administration may involve different TUPE considerations from a sale of assets during liquidation.

The legal structure of the transaction must therefore be examined.

Where TUPE does not apply, or the Home Office’s qualifying transfer provisions are not satisfied, the worker may need ordinary sponsorship and immigration arrangements with the purchaser.

 

11. What Happens if the Purchaser Does Not Have a Sponsor Licence?

 

A purchaser that intends to employ sponsored workers must establish whether it requires a sponsor licence and whether it holds the appropriate authorisation.

Where a qualifying business transfer occurs, the Home Office guidance provides specific requirements for a successor organisation that does not already hold the necessary licence.

Under the relevant provisions, the successor may be required to apply for a sponsor licence or extend its existing licence within 20 working days of the transfer.

If the required valid application is not made within 20 working days, or the application is refused, the transferred workers will have their immigration permission cancelled, except any workers who can be sponsored under an appropriate existing licence held by the incoming organisation.

The purchaser should not assume that it can indefinitely employ sponsored workers using the insolvent company’s licence.

Nor should it assume that the seller’s unused Certificates of Sponsorship can be transferred as part of the transaction.

Where the relevant business-transfer provisions do not apply, ordinary sponsorship and immigration requirements may need to be satisfied before the workers can begin employment with the purchaser.

These issues should form part of immigration due diligence before completion.

 

12. What Happens to Sponsored Workers’ Dependants?

 

The insolvency of a sponsoring employer can also affect family members whose immigration permission is linked to a sponsored worker.

Dependants may include an eligible partner and children who hold immigration permission under the relevant dependant provisions.

The consequences depend on the principal worker’s immigration position and the rules applicable to the dependants.

Where the principal worker’s sponsored employment ends or their immigration permission is cancelled, the Home Office may also consider the position of their dependants.

However, dependants do not necessarily lose their permission automatically on the date the employer becomes insolvent.

The relevant Immigration Rules and any Home Office cancellation decisions must be considered.

For example, a Skilled Worker may be made redundant following the liquidation of their employer while their partner and children hold dependant permission.

The family should establish whether the principal worker can obtain alternative sponsorship or qualify for another immigration route.

The effect of any new application on the dependants should also be considered.

Where the principal worker changes sponsoring employers, eligible dependants may be able to retain or extend their permission in accordance with the applicable rules.

Families should avoid assuming that all members necessarily have identical immigration expiry dates or that the same cancellation decision automatically applies to everyone.

Individual advice may be particularly important where children are attending school or family members have different immigration histories.

 

13. Can Insolvency Affect a Skilled Worker’s Indefinite Leave to Remain Application?

 

Yes. Employer insolvency can affect a Skilled Worker’s eligibility for indefinite leave to remain, particularly where the worker is approaching the relevant qualifying period or preparing a settlement application.

Settlement under the Skilled Worker route is subject to specific Immigration Rules.

These include requirements concerning the applicant’s immigration history, qualifying residence and the sponsorship or employment conditions applicable at the time of the application.

Where the employer loses its sponsor licence or the worker’s employment ends, the worker may no longer be able to satisfy all of the relevant settlement requirements through that employer.

For example, a Skilled Worker who is close to completing the qualifying period may be made redundant when their employer enters liquidation.

The worker should establish whether they remain eligible to apply for settlement, whether alternative sponsorship is required and whether any interruption affects their immigration position.

The consequences depend on the rules in force at the relevant time and the individual’s circumstances.

Employees should not assume that completing a particular number of years in the UK guarantees settlement regardless of changes to their sponsorship.

Equally, an employer’s insolvency does not necessarily mean that all previous qualifying residence is lost.

The position requires an individual assessment.

 

14. Does Changing Sponsors Restart the Settlement Qualifying Period?

 

Changing sponsoring employers does not, by itself, necessarily restart the qualifying residence period for settlement under the Skilled Worker route.

However, the worker must continue to satisfy the applicable immigration requirements.

For example, an employee may have spent several years lawfully working for one licensed sponsor before moving to another employer following insolvency.

Where the worker obtains the appropriate immigration permission and maintains the relevant continuity requirements, their earlier qualifying residence may remain relevant to a future settlement application.

The position depends on the Immigration Rules applicable to the worker’s route and circumstances.

Any period without valid permission, failure to comply with immigration conditions or other interruption may have consequences.

Workers approaching settlement eligibility should therefore obtain advice before changing employers or making decisions about their immigration applications.

This is particularly important where the insolvency occurs shortly before a planned settlement application.

 

15. What if a Sponsored Worker Is on Maternity, Paternity or Sick Leave?

 

Sponsored employees may be absent from work for legitimate reasons when their employer enters insolvency proceedings.

These may include maternity leave, paternity leave, adoption leave, sick leave or other authorised absences.

The employer must consider the relevant sponsorship rules and any applicable exceptions concerning salary, absence and reporting.

For example, a Skilled Worker on maternity leave may be affected by the liquidation of their employer.

The worker’s employment rights and immigration position must be assessed separately.

The fact that the employee is on an authorised absence does not automatically protect the sponsor licence from revocation.

Similarly, the employer’s insolvency does not remove the need to consider the applicable employment law protections.

Where employment terminates, the organisation must address the relevant sponsorship reporting obligations.

The worker should also establish whether the termination affects their immigration permission and whether alternative sponsorship or another immigration route is available.

Employers and insolvency practitioners should avoid treating employees on authorised leave as having identical circumstances to employees actively working at the time of insolvency.

Relevant immigration and employment law provisions may require separate consideration.

 

16. Can a Sponsored Worker Claim Unpaid Wages or Redundancy Payments?

 

Sponsored workers may have employment rights concerning unpaid wages, notice pay, holiday pay and statutory redundancy payments when their employer becomes insolvent.

The availability of these rights depends on the employee’s circumstances and the applicable employment law requirements.

Holding immigration permission under the Skilled Worker route does not automatically exclude an employee from statutory employment protections.

Where the employer is insolvent, eligible employees may be able to claim certain payments through the government’s statutory arrangements.

However, employment entitlements and immigration permission are separate matters.

For example, an employee may qualify for statutory redundancy pay while also facing cancellation of their immigration permission following the loss of sponsorship.

The right to pursue unpaid employment-related sums does not automatically preserve the employee’s immigration permission.

Equally, the loss of sponsorship does not necessarily extinguish accrued employment rights.

Insolvency practitioners should therefore address employee claims under the relevant employment and insolvency law procedures while recognising that sponsored workers may also require immigration advice.

 

17. What Should Employers Tell Sponsored Workers About Insolvency?

 

Employers and insolvency practitioners should provide affected sponsored workers with accurate information about decisions affecting their employment.

Where administration or liquidation is taking place, employees should be informed of relevant developments in accordance with the applicable employment law requirements.

Where sponsored employment is ending, the employer should explain the employment decision and the date on which the employment relationship will terminate.

The employer should also avoid making inaccurate statements about the worker’s immigration permission.

For example, employees should not be told that their visas automatically expire on the date the company enters administration.

Nor should they be assured that they have a guaranteed 60 days to find another sponsor.

The employer can explain that the loss of sponsorship may lead to Home Office action affecting immigration permission and that the worker should obtain individual advice.

Where a business transfer is proposed, employees should be informed about the arrangements that are known, while avoiding assurances that sponsorship will automatically continue.

The purchaser’s licensing position and the relevant transfer requirements should be established before definitive statements are made.

Communications should be clear, factual and consistent with the employer’s legal obligations.

 

18. What Information Should Be Given to Redundant Sponsored Workers?

 

Where sponsored employees are made redundant, the employer should provide appropriate employment documentation and accurate information concerning the termination.

Relevant information may include:

 

• The effective date of termination of employment.
• Details of the redundancy or dismissal decision.
• Information concerning notice, final salary and accrued holiday pay.
• Details of any applicable redundancy entitlements.
• Confirmation that the employer will address its relevant Home Office reporting obligations.
• Information about any proposed business transfer or successor employment arrangements.
• Relevant employment documents that the worker may need when seeking alternative work.
• A recommendation to obtain individual immigration advice concerning their permission and available options.

 

The employer should not attempt to determine the worker’s immigration cancellation deadline without examining the relevant Home Office decision and applicable rules.

Where the employee has dependants, the potential consequences for family members should also be considered.

Employees should be encouraged to act promptly where they wish to obtain alternative sponsorship.

However, the employer should avoid implying that a new job offer alone resolves the worker’s immigration position.

The new sponsorship and immigration requirements must be satisfied.

 

19. Sponsored Worker Insolvency Scenarios

 

The following table illustrates how the immigration consequences may differ according to the circumstances.

 

Scenario	Potential immigration consequence	Principal consideration
Employer enters administration and continues trading.	Sponsored employment may continue, subject to the organisation’s licence status and compliance with the relevant rules.	Confirm continued sponsorship authorisation and the worker’s employment conditions.
Worker is made redundant during administration.	Cessation of sponsorship may lead to cancellation or shortening of immigration permission.	Address worker reporting and assess alternative immigration options.
Employer enters liquidation.	The Home Office guidance provides for licence revocation, potentially affecting sponsored workers’ permission.	Establish the worker’s immigration position and any Home Office cancellation decision.
Worker obtains an offer from another licensed employer.	Ordinary change-of-employer sponsorship and immigration requirements may apply.	Obtain the required CoS and immigration permission before commencing the new sponsored role.
Business is sold and workers transfer under qualifying arrangements.	Workers may be able to continue without an ordinary change-of-employer application.	Confirm that the successor satisfies the relevant Home Office licensing and transfer requirements.
Purchaser does not hold an appropriate sponsor licence.	The successor may need to apply for authorisation within the prescribed period.	Address the applicable 20-working-day application requirement and consequences of refusal.
Worker is approaching settlement eligibility.	Loss of employment or sponsorship may affect the ability to satisfy settlement requirements.	Assess eligibility and immigration continuity before applying.
Worker has dependant family members.	Dependants’ permission may be affected by changes to the principal worker’s immigration position.	Review the family’s individual immigration circumstances.

 

These examples are illustrative. The consequences depend on the relevant Immigration Rules, Home Office guidance and individual circumstances.

 

20. What Should Sponsored Workers Do if Their Employer Becomes Insolvent?

 

Sponsored workers affected by employer insolvency should establish their employment and immigration position as soon as possible.

The appropriate action depends on whether employment continues, whether the sponsor licence remains valid and whether the worker intends to remain in the UK.

Where employment is ending, the worker should consider whether they can obtain sponsorship from another licensed employer.

Where a business sale is proposed, they should establish whether their employment is expected to transfer and whether the purchaser has appropriate sponsorship arrangements.

Workers should also review the expiry date and conditions of their existing immigration permission.

Where the Home Office issues a cancellation decision, the worker should establish the effective date and consider the options available within the relevant period.

Those with dependant family members should assess the potential consequences for the family as a whole.

Workers approaching settlement eligibility should consider whether the insolvency affects their ability to satisfy the applicable requirements.

Employees should retain relevant employment and immigration documentation, including details of their previous sponsorship and any Home Office correspondence.

Where the position is uncertain, prompt individual immigration advice may help identify lawful options and avoid preventable problems.

 

21. Why Employers Must Consider Immigration Consequences Before Making Workforce Decisions

 

Insolvency often requires urgent decisions concerning redundancies, continued trading and business transfers.

Where the workforce includes sponsored employees, those decisions can have consequences extending beyond employment law.

The termination of sponsored employment may lead to Home Office reporting obligations and affect the worker’s immigration permission.

Licence revocation may affect multiple sponsored employees simultaneously.

A business sale may require the purchaser to obtain or extend its sponsorship authorisation within a prescribed period.

Changes to salary, duties or working arrangements may also affect whether sponsored employment remains compliant.

Employers and insolvency practitioners should therefore identify sponsored workers before implementing material workforce changes wherever practicable.

They should establish the relevant sponsorship requirements, assess the immigration consequences and ensure that affected employees receive accurate information.

Where a rescue or acquisition is contemplated, immigration planning can also be important to preserving the value of the business and retaining employees with specialist skills.

Coordinating insolvency, employment and immigration advice can help ensure that decisions are made with an accurate understanding of the legal requirements and practical consequences.

 

 

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Section F: Business Rescue, Acquisitions and Transfer of Sponsored Workers

 

1. What Happens to a Sponsor Licence When an Insolvent Business Is Sold?

 

Where an insolvent business is sold, the immigration consequences depend on the structure of the transaction, the identity of the sponsoring legal entity and whether sponsored employees transfer to another organisation.

A UK sponsor licence is granted to a specific legal entity. It cannot simply be sold, assigned or transferred to a purchaser as part of the company’s business assets.

This distinction is particularly important in administration, liquidation and pre-pack transactions, where the commercial objective may be to preserve business operations and retain employees.

For example, a purchaser may acquire an insolvent company’s premises, customer contracts, equipment and trading name while retaining substantially the same workforce.

Although the business may appear unchanged commercially, the legal entity employing the workers may have changed.

Where the workforce includes sponsored employees, the purchaser must establish whether it has the necessary Home Office authorisation to assume sponsorship responsibility.

The seller and purchaser must also consider the Home Office rules governing changes in ownership, business transfers and the reporting of sponsored workers.

In qualifying circumstances, the Home Office’s business-transfer provisions may allow sponsored employees to continue working for the successor organisation without making ordinary change-of-employer immigration applications.

However, those provisions do not mean that the seller’s sponsor licence transfers to the purchaser.

The parties must satisfy the applicable conditions, reporting requirements and licensing obligations.

Immigration sponsorship should therefore form part of transaction planning before the sale completes.

 

2. Can a Sponsor Licence Be Transferred to a Purchaser?

 

No. A sponsor licence cannot be transferred from one legal entity to another as a commercial asset.

The licence represents Home Office authorisation granted to the sponsoring organisation following an assessment of its eligibility and suitability.

A purchaser cannot acquire that authorisation merely by buying the seller’s business or agreeing to assume its employment liabilities.

For example, a newly incorporated company may purchase the trading operations of an insolvent sponsor and continue using the same business name.

The new company does not automatically inherit the former employer’s sponsor licence.

It must establish whether it needs to obtain its own licence and whether the Home Office’s business-transfer provisions apply to the sponsored employees.

The distinction between transferring a sponsor licence and assuming sponsorship responsibility is important.

Although the licence itself cannot transfer, the Home Office guidance provides arrangements under which an appropriately authorised successor may assume responsibility for sponsored workers following a qualifying business transfer.

These arrangements are subject to specific conditions.

Purchasers should therefore avoid describing the transaction as involving the transfer of the seller’s sponsor licence.

The appropriate analysis concerns the successor’s sponsorship authorisation and the treatment of the affected workers under the Home Office rules.

 

3. What Is the Difference Between an Asset Purchase and a Share Purchase?

 

The legal structure of an acquisition can materially affect the sponsorship analysis.

In an asset purchase, the purchaser acquires specified assets or business operations from the seller.

The purchaser may become the employer of transferring employees, depending on the transaction and the applicable employment law provisions.

Where sponsored workers move to a different legal entity, the Home Office business-transfer requirements must be considered.

In a share purchase, the purchaser acquires shares in the company rather than directly acquiring its underlying business assets.

The employing legal entity may remain the same following completion.

However, a change in ownership can still trigger specific sponsor licensing consequences.

Where the transaction constitutes a relevant change in direct ownership under C4.5, the existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. A new application will then be required where appropriate.

Purchasers should therefore not assume that a share purchase automatically preserves the sponsor licence merely because the company’s registration number and employment contracts remain unchanged.

Equally, an asset purchase should not automatically be treated as requiring every sponsored employee to make an ordinary change-of-employer application.

The Home Office provides specific arrangements for qualifying business transfers.

The correct approach is to identify the transaction structure, determine which legal entity holds or requires sponsorship authorisation and apply the relevant Home Office provisions.

 

4. Does a Share Purchase Automatically Preserve the Sponsor Licence?

 

No. The fact that a share purchase leaves the employing company in existence does not necessarily mean that its sponsor licence remains unaffected.

The Home Office rules concerning changes in ownership must be considered.

Where the transaction constitutes a relevant change in direct ownership under C4.5, the existing sponsor licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. The organisation must then make a new licence application where required.

This can arise even where the business continues operating from the same premises and employees remain under their existing employment contracts.

For example, an investor may acquire control of a financially distressed company through a share transaction.

Although the company’s legal identity remains unchanged, the transaction may constitute a change in ownership for sponsorship purposes.

The parties must establish the relevant Home Office reporting and licensing requirements.

Where a new application is required, the timing of the transaction and the applicable Home Office deadlines become important.

Purchasers should therefore include sponsor licence due diligence in share acquisitions as well as asset transactions.

The analysis should not be limited to whether employees formally change employer.

 

5. How Does TUPE Affect Sponsored Workers in an Insolvency Sale?

 

The Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly known as TUPE, may apply where a business or undertaking transfers from one employer to another.

TUPE can protect certain employment rights and provide for the transfer of employment relationships in qualifying circumstances.

However, TUPE and immigration sponsorship are separate legal frameworks.

The application of TUPE does not automatically transfer the seller’s sponsor licence.

The Home Office has specific rules concerning sponsored workers affected by qualifying transfers under TUPE or similar statutory arrangements.

Where the relevant conditions are satisfied, the successor organisation may assume sponsorship responsibility without the workers needing to make ordinary change-of-employer immigration applications.

The successor must nevertheless satisfy the applicable sponsor licensing and reporting requirements.

The position requires particular care during insolvency because TUPE contains specific provisions affecting transfers in certain insolvency proceedings.

For example, a business sale during administration may have different employment law consequences from a sale occurring during liquidation.

The parties must establish whether TUPE applies to the transaction and whether the relevant Home Office sponsorship transfer provisions are satisfied.

Neither conclusion should be assumed solely because the purchaser intends to retain the workforce.

 

6. Can Sponsored Workers Transfer Without Applying for New Visas?

 

Yes, in qualifying circumstances.

The Home Office sponsor guidance contains provisions allowing sponsored workers affected by qualifying business transfers to continue their employment without making ordinary change-of-employer immigration applications.

These arrangements can apply where workers transfer under TUPE or similar protection and the relevant sponsorship conditions are satisfied.

The successor organisation must accept responsibility for the sponsored workers and meet the applicable licensing requirements.

For example, a licensed company may acquire the business of another licensed sponsor through a qualifying transfer.

Where the Home Office’s conditions are satisfied, the transferred employees may be able to continue working under their existing immigration permission without each obtaining a new Certificate of Sponsorship and making an ordinary change-of-employer application.

However, the successor must complete the relevant sponsorship reporting and administrative requirements.

The arrangements should not be treated as an automatic exemption from immigration compliance.

Where the transaction does not qualify under the relevant provisions, ordinary change-of-employer requirements may apply.

Similarly, where the successor fails to satisfy the applicable licensing requirements, the workers’ immigration position may be affected.

The parties should therefore confirm the relevant conditions before relying on sponsorship continuity.

 

7. What Must the Purchaser Do if It Already Holds a Sponsor Licence?

 

Where the purchaser already holds a sponsor licence, it must establish whether the licence authorises sponsorship under the relevant immigration routes.

For example, a purchaser licensed to sponsor workers under one route should not assume that its existing authorisation necessarily covers every category of sponsored employee transferring from the seller.

The purchaser must also consider the Home Office business-transfer reporting requirements.

Where the transfer qualifies under the relevant provisions, the successor must accept sponsorship responsibility for the affected workers.

This includes complying with the applicable duties concerning record keeping, monitoring, reporting and the conditions of sponsored employment.

The successor should obtain the information necessary to identify the workers and establish their sponsorship arrangements.

Relevant information may include immigration routes, Certificates of Sponsorship, job duties, salaries, work locations and previous reporting records.

The purchaser should also identify whether any employees have outstanding immigration applications or circumstances requiring particular attention.

Where the existing sponsor licence does not cover the necessary route, the purchaser must address the applicable requirements for extending its authorisation.

Possession of a sponsor licence does not remove the need to comply with the specific business-transfer provisions.

 

8. What if the Purchaser Does Not Have a Sponsor Licence?

 

Where a purchaser intends to retain sponsored employees but does not hold the necessary sponsor licence, the Home Office’s successor sponsorship requirements must be considered.

Under the relevant business-transfer provisions in section C4 of the sponsor guidance, a successor organisation may be required to apply for a sponsor licence within 20 working days of the transfer.

Where the successor already holds a licence but requires authorisation for an additional route, it may need to apply to extend its licence within the applicable period.

These requirements are particularly important in insolvency transactions because completion may take place quickly.

For example, a newly incorporated company may acquire an insolvent business through a pre-pack administration and retain its sponsored workforce.

If the transaction qualifies under the Home Office’s business-transfer provisions, the new company must establish and satisfy the relevant successor application requirements.

The purchaser should not assume that it can continue relying indefinitely on the insolvent company’s sponsor licence.

Nor should it assume that submitting an application automatically guarantees approval.

The Home Office will assess the application against the relevant sponsor licensing requirements.

If the required valid application is not made within 20 working days, or the application is refused, the transferred workers will have their immigration permission cancelled, except any workers who can be sponsored under an appropriate existing licence held by the incoming organisation.

Purchasers should therefore address sponsorship authorisation during transaction planning rather than waiting until after completion.

 

9. What Is the 20-Working-Day Rule for Successor Sponsors?

 

The Home Office sponsor guidance establishes specific requirements for successor organisations following qualifying business transfers.

Under the relevant provisions, a successor that does not hold the necessary sponsorship authorisation may be required to apply for a sponsor licence or extend its existing licence within 20 working days of the transfer.

The period is linked to the relevant business-transfer event.

It should not be confused with the separate 20-working-day reporting requirements applying when a company enters administration, agrees a CVA or enters liquidation.

For example, an administrator may be appointed to a sponsoring company and subsequently sell the business to a purchaser.

The administration notification requirement and the successor’s licensing requirement concern different events.

Each must be assessed separately.

Where the purchaser intends to rely on the qualifying business-transfer provisions, it should establish the date from which the applicable period runs and ensure that the required application is submitted in accordance with the Home Office guidance.

If the required valid application is not made within 20 working days, the transferred workers will have their immigration permission cancelled, except any workers who can be sponsored under an appropriate existing licence held by the incoming organisation.

Purchasers should not assume that commercial completion arrangements or contractual agreements can extend a Home Office deadline.

 

10. What Happens if the Successor’s Sponsor Licence Application Is Refused?

 

Where a successor organisation applies for a sponsor licence following a qualifying business transfer, the application must satisfy the Home Office’s eligibility and suitability requirements.

The fact that the purchaser has acquired an established business or retained existing sponsored employees does not guarantee that a licence will be granted.

If the required application is refused, the transferred workers will have their immigration permission cancelled, except any workers who can be sponsored under an appropriate existing licence held by the incoming organisation.

For example, a purchaser may acquire an insolvent company’s business and submit a sponsor licence application within the prescribed period.

If the Home Office subsequently refuses the application, the purchaser cannot assume that the employees may continue indefinitely under the seller’s former sponsorship arrangements.

The workers may need to consider alternative sponsorship or other immigration options.

The purchaser may also face operational difficulties if employees essential to the acquired business cannot continue working lawfully.

For this reason, the likelihood of satisfying the sponsor licensing requirements should be assessed before the transaction completes.

 

11. How Do Pre-Pack Administrations Affect Sponsored Workers?

 

A pre-pack administration involves arranging the sale of a company’s business or assets before the administrator is formally appointed, with completion taking place shortly after the appointment.

Pre-pack transactions can preserve commercial operations and reduce disruption to customers and employees.

However, the speed of the transaction can create particular immigration risks.

Where the purchaser is a different legal entity, the seller’s sponsor licence does not automatically transfer.

The purchaser must establish whether the transaction qualifies under the Home Office business-transfer provisions and whether it has the necessary sponsorship authorisation.

For example, a new company may acquire an insolvent employer’s trading operations and retain most of its employees.

Some of those employees may hold Skilled Worker permission linked to the insolvent company.

Although the employees continue performing the same duties, the purchaser must establish whether the relevant sponsorship transfer requirements are satisfied.

Where the purchaser needs to apply for authorisation, the applicable 20-working-day requirement must be considered.

Where the transaction does not qualify for the relevant provisions, ordinary change-of-employer immigration requirements may apply.

Immigration due diligence should therefore be undertaken during the pre-pack planning process.

The parties should not leave sponsorship arrangements to be resolved after the sale merely because the commercial timetable is compressed.

 

12. Can a New Company Acquire the Business and Retain Its Sponsored Workforce?

 

A newly incorporated company may acquire the business or assets of an insolvent sponsor and seek to retain its workforce.

However, the new company is a separate legal entity and does not automatically inherit the former employer’s sponsorship authorisation.

It must establish whether it needs a sponsor licence and whether the relevant Home Office business-transfer provisions apply.

For example, former directors may establish a new company to acquire the trading operations of a business entering administration.

The new company may wish to retain sponsored employees because they possess specialist skills or are essential to fulfilling customer contracts.

The purchaser must establish whether the employees transfer under qualifying arrangements and whether the successor licensing requirements can be satisfied.

Where the transaction does not qualify, the new company may need to sponsor the workers through ordinary immigration procedures.

The Home Office may also consider relevant previous sponsorship compliance history when assessing the new company’s eligibility and suitability.

Establishing a new legal entity does not automatically remove the significance of previous compliance failures.

The purchaser should therefore assess both the transaction structure and its ability to obtain sponsorship authorisation.

 

13. Can Sponsored Workers Transfer Between Companies in the Same Group?

 

Corporate groups may seek to transfer sponsored employees between related companies as part of a financial restructuring.

For example, a parent company may move business operations from a financially distressed subsidiary to another group company.

However, companies within the same corporate group are not automatically treated as a single sponsoring legal entity.

The relevant sponsor licence arrangements and Home Office requirements must be considered.

Where employees move between separate legal entities, the transfer may trigger sponsorship reporting, licensing or immigration application requirements.

In qualifying circumstances, the Home Office business-transfer provisions may apply.

However, common ownership does not independently establish that the transfer qualifies for those provisions.

The parties must examine the legal structure, the employment arrangements and the sponsorship authorisation held by the receiving organisation.

For example, a group company holding its own sponsor licence may be able to assume responsibility for workers transferring under qualifying arrangements, subject to the relevant conditions.

Where the receiving company does not hold appropriate authorisation, additional licensing requirements may arise.

Group restructurings should therefore be assessed using the same care as transactions involving unrelated purchasers.

 

14. What Happens When Only Part of the Business Is Sold?

 

An insolvent company may sell only part of its business rather than transferring all operations to a purchaser.

For example, an administrator may sell one trading division while retaining or closing the remaining activities.

Where sponsored employees work within the transferred division, the parties must establish whether their employment transfers and whether the Home Office business-transfer provisions apply.

Other sponsored employees may remain with the original organisation or face redundancy.

The immigration consequences may therefore differ between groups of workers employed by the same company.

The purchaser should identify which employees are transferring and establish its sponsorship responsibilities for those individuals.

The original employer must address any continuing reporting obligations concerning employees who remain or whose employment ends.

Where the seller’s sponsor licence is affected by insolvency or ownership changes, the consequences for the remaining workforce must also be considered.

For example, the sale of a profitable division does not necessarily preserve the seller’s authority to sponsor employees working in the remaining business.

The relevant insolvency and sponsor licensing provisions must be applied separately.

 

15. Does a Business Transfer Require New Certificates of Sponsorship?

 

The requirement for new Certificates of Sponsorship depends on whether the transaction qualifies under the Home Office’s business-transfer provisions.

Where the relevant conditions are satisfied, sponsored workers may be able to continue their employment under the successor organisation without being assigned new Certificates of Sponsorship for ordinary change-of-employer applications.

However, the successor must satisfy the applicable licensing and reporting requirements.

Where the transaction does not qualify for the relevant provisions, ordinary sponsorship arrangements may apply.

For example, a purchaser may recruit former employees of an insolvent company after their employment has ended rather than acquiring a business with a qualifying transfer of employment.

In those circumstances, the purchaser may need to assign new Certificates of Sponsorship and the workers may need to make the relevant immigration applications.

The distinction should be established before the employees begin working for the purchaser.

The parties should not assume that the seller’s existing Certificates of Sponsorship can simply be transferred or reassigned to the purchaser.

Nor should they assume that every transfer requires a new immigration application.

The correct approach depends on the Home Office provisions governing the transaction.

 

16. What Immigration Due Diligence Should a Purchaser Undertake?

 

Immigration due diligence is particularly important where an insolvent business employs workers whose permission depends on sponsorship.

The purchaser should establish whether it can lawfully retain those employees and what action is required before or after completion.

Relevant enquiries should include:

 

• Which legal entity currently holds the sponsor licence.
• The sponsor licence number, authorised routes and current licence status.
• Whether the seller is subject to suspension, revocation proceedings or other Home Office compliance action.
• The number of sponsored workers employed by the business.
• The immigration routes under which those workers are sponsored.
• Details of assigned Certificates of Sponsorship and relevant immigration expiry dates.
• The workers’ occupations, salaries, duties and work locations.
• Whether proposed changes to employment arrangements will affect sponsorship compliance.
• Whether the transaction constitutes a relevant change in ownership or qualifying business transfer.
• Whether TUPE or similar statutory protection applies.
• Whether the purchaser holds an appropriate sponsor licence.
• Whether a new or extended sponsor licence application is required.
• The applicable Home Office reporting and application deadlines.
• Whether any sponsored workers have pending immigration applications.
• Whether the seller has outstanding sponsorship reporting or record-keeping breaches.
• Whether the purchaser can obtain the records needed to assume ongoing sponsorship responsibility.
• Whether right to work checks have been completed in accordance with the applicable requirements.
• Whether the October 2026 right to work changes affect the proposed workforce arrangements.

 

The scope of due diligence should reflect the size of the sponsored workforce and the structure of the transaction.

Where sponsorship is essential to the acquired business, unresolved immigration issues may affect valuation, completion conditions and operational planning.

 

17. What Documents Should Be Obtained Before Completion?

 

Where a purchaser intends to retain sponsored employees, it should obtain sufficient information to establish the relevant sponsorship arrangements and meet its obligations.

Documents may include:

 

• Confirmation of the seller’s sponsor licence details and status.
• A schedule of sponsored employees and their immigration routes.
• Relevant Certificates of Sponsorship information.
• Employment contracts and job descriptions.
• Salary and payroll records.
• Records of work locations and sponsored duties.
• Relevant Home Office reporting records.
• Correspondence concerning compliance visits or enforcement action.
• Information about pending immigration applications.
• Right to work checking records.
• Details of proposed changes to employment arrangements following completion.
• Documents relevant to the application of TUPE or similar transfer provisions.

 

Personal information must be handled in accordance with applicable data protection requirements.

The purchaser should establish what records are necessary for sponsorship compliance and how they can lawfully be transferred or accessed.

Where the seller’s records are incomplete, the purchaser should identify the resulting risks and determine what corrective action is possible.

Completion of a business acquisition does not automatically cure historic deficiencies in immigration records.

 

18. What Right to Work Checks Must a Purchaser Undertake?

 

A purchaser acquiring an insolvent business must establish the right to work checking requirements applicable to its workforce.

The obligations depend on the transaction structure, whether employees transfer under TUPE and the nature of the working arrangements.

On a qualifying TUPE transfer, the purchaser obtains the benefit of any statutory excuse established by the transferor, but can inherit exposure where the original check was defective. The Home Office therefore advises fresh checks and allows a 60-calendar-day grace period from the transfer in which to complete them. The grace period does not extend the deadline for any subsequent follow-up check.

Where individuals are recruited independently rather than transferred, ordinary right to work checking requirements may apply.

The changes effective from 1 October 2026 also extend the statutory framework to specified working arrangements beyond conventional employment contracts.

These include certain worker contracts, individual subcontracting arrangements and relevant online matching services.

For example, a purchaser may acquire an insolvent business and engage former employees as individual subcontractors.

The purchaser must establish whether the expanded statutory checking regime applies to those arrangements.

The contractual description of an individual as self-employed does not necessarily determine whether statutory right to work obligations arise.

Where digital verification services are used, the purchaser must also ensure that the relevant checking method and provider satisfy the applicable Home Office requirements.

Right to work compliance should therefore be considered alongside sponsor licensing before and after completion.

 

19. Can a Purchaser Change Sponsored Workers’ Salaries or Duties?

 

A purchaser may intend to restructure the acquired workforce following completion.

Proposed changes may include reducing salaries, altering working hours, changing job duties or relocating employees.

Where sponsored workers are affected, the changes must be assessed against the relevant immigration requirements.

For example, a purchaser may wish to combine two management roles or reduce salary costs following the acquisition.

If the affected employees hold Skilled Worker permission, the revised arrangements must continue to satisfy the applicable sponsorship requirements.

Some changes may be reportable to the Home Office.

Other changes may require a new immigration application or may not be permissible under the existing sponsorship arrangements.

The fact that employees transfer under TUPE does not create a general exemption from the immigration requirements governing their sponsored employment.

Similarly, agreement to a contractual variation does not automatically establish immigration compliance.

The purchaser should therefore review proposed changes before implementation.

Where significant restructuring is planned, immigration advice should be coordinated with the relevant employment and corporate law advice.

 

20. Can a Purchaser Retain Sponsored Workers if the Seller’s Licence Has Been Revoked?

 

The position depends on the circumstances of the licence revocation, the transaction structure and whether the relevant Home Office business-transfer provisions apply.

A purchaser should not assume that acquiring the business automatically restores sponsorship authorisation lost by the seller.

Where the seller’s licence has been revoked, the purchaser must establish whether the workers can lawfully transfer under the relevant provisions or whether new sponsorship and immigration applications are required.

The timing of the revocation and the transfer may be important.

For example, a purchaser may acquire assets from a company that entered liquidation and subsequently lost its sponsor licence.

The purchaser cannot simply rely on the seller’s former licence to employ sponsored workers.

The relevant Home Office provisions must be considered, together with the workers’ existing immigration permission.

Where the qualifying business-transfer arrangements are unavailable, the purchaser may need to sponsor the employees through ordinary procedures.

Any Home Office cancellation action affecting the workers must also be considered.

Purchasers should therefore obtain advice before assuming that a transaction can preserve sponsored employment following revocation.

 

21. What Happens if the Business Is Split Between Several Purchasers?

 

An insolvent business may be divided and sold to several purchasers.

For example, an administrator may sell different trading divisions to separate companies.

Where sponsored employees transfer to different purchasers, each successor must establish its own sponsorship obligations.

The fact that one purchaser holds an appropriate sponsor licence does not automatically authorise another purchaser to sponsor workers.

Each transaction must be assessed according to its legal structure and the relevant Home Office provisions.

The parties should identify which employees transfer to each purchaser and whether the applicable business-transfer conditions are satisfied.

Where a purchaser requires a sponsor licence or an extension of its existing authorisation, the relevant application requirements and deadlines must be addressed.

The original employer must also consider its reporting obligations concerning the transfer or termination of sponsored employment.

Where some employees do not transfer, their immigration position must be assessed separately.

A transaction involving several purchasers may therefore create multiple sponsorship reporting and licensing requirements.

Clear allocation of responsibility is important to avoid omissions.

 

22. What Should Be Included in the Business Sale Agreement?

 

Where an insolvent business employs sponsored workers, the transaction documents should address relevant immigration matters.

The appropriate provisions depend on the transaction structure and the parties’ commercial arrangements.

Matters for consideration may include:

 

• Identification of the sponsored employees expected to transfer.
• Confirmation of the seller’s sponsor licence details and status.
• The purchaser’s existing sponsorship authorisation.
• Any requirement for the purchaser to apply for or extend a sponsor licence.
• Responsibility for Home Office reporting before and after completion.
• The transfer of relevant sponsorship records.
• Cooperation concerning outstanding immigration applications.
• Disclosure of known sponsorship compliance issues.
• Arrangements for responding to Home Office enquiries.
• The proposed treatment of employees who cannot lawfully transfer.
• Any conditions concerning the purchaser’s ability to satisfy sponsorship requirements.
• Allocation of relevant commercial risks, subject to the applicable law.

 

Contractual provisions cannot override the Immigration Rules or bind the Home Office to grant a sponsor licence.

However, clear transaction documentation can help allocate responsibilities and ensure that the parties understand the steps required.

Where the sale is being completed urgently, immigration matters should not be omitted simply because the transaction timetable is compressed.

 

23. Business Transfer Sponsorship Checklist

 

The following checklist summarises the principal immigration considerations for purchasers acquiring an insolvent business.

 

Action	Purpose
Identify the transaction structure.	Establish whether the acquisition involves shares, assets or a qualifying business transfer.
Confirm the seller’s sponsor licence status.	Identify existing authorisation and any enforcement concerns.
Identify sponsored employees.	Establish which workers may require successor sponsorship.
Assess TUPE and similar transfer provisions.	Determine whether the relevant employment and sponsorship transfer arrangements apply.
Confirm the purchaser’s licence position.	Establish whether the purchaser holds the necessary sponsorship authorisation.
Identify any new or extended licence application.	Address the applicable successor sponsorship requirements.
Record the transfer date.	Calculate relevant Home Office reporting and application deadlines.
Address the 20-working-day successor requirement where applicable.	Reduce the risk of non-compliance with the prescribed application period.
Review worker immigration permission.	Identify any pending applications, cancellation issues or individual risks.
Preserve sponsorship records.	Ensure the successor can meet its continuing compliance duties.
Review right to work obligations.	Apply the relevant checking rules, including the October 2026 changes.
Assess planned workforce changes.	Identify salary, duty or location changes affecting sponsorship.
Complete required Home Office notifications.	Address the seller’s and purchaser’s reporting responsibilities.
Document responsibility for compliance.	Establish appropriate governance following completion.

 

The checklist should be applied alongside the relevant Home Office guidance and adapted to the circumstances of the transaction.

Where the purchaser is acquiring a business with a substantial sponsored workforce, specialist immigration due diligence should be undertaken before completion wherever practicable.

 

24. Why Immigration Planning Matters to Business Rescue

 

For businesses employing overseas workers, immigration sponsorship can be a significant factor in the viability of a rescue or acquisition.

A purchaser may be interested in retaining employees who possess specialist skills, hold professional qualifications or have extensive knowledge of the business.

Where those employees require sponsorship, the purchaser must establish whether lawful employment can continue following completion.

Failure to address the Home Office requirements may result in operational disruption, delays to recruitment or the loss of employees essential to the acquired business.

Similarly, administrators seeking to preserve a business as a going concern must understand whether sponsorship can continue during administration and what will be required if the business is sold.

The relevant issues include the non-transferability of sponsor licences, ownership-change rules, qualifying business transfers, successor licensing deadlines and the position of individual workers.

Right to work compliance must also be considered, particularly where the purchaser intends to restructure employment or subcontracting arrangements.

Early immigration planning can help identify potential obstacles, establish the action required and support informed commercial decisions.

Where sponsorship is central to the acquired workforce, immigration due diligence should be treated as an important part of the transaction rather than a post-completion administrative exercise.

 

 

Back to top

 

Section G: Practical Guidance for Employers and Insolvency Practitioners

 

1. What Should an Employer Do When Insolvency Becomes Likely?

 

Employers holding a UK sponsor licence should consider their immigration obligations as soon as financial difficulties create a realistic prospect of administration, liquidation, a company voluntary arrangement or a business sale.

Waiting until formal insolvency proceedings begin can leave insufficient time to identify sponsored workers, establish reporting responsibilities and assess the consequences of proposed employment decisions.

The first step is to confirm the organisation’s sponsor licence position, including the legal entity holding the licence, its authorised sponsorship routes and any existing Home Office compliance concerns.

The employer should then identify its sponsored workforce and establish which employees hold immigration permission linked to the organisation.

Relevant information includes the workers’ immigration routes, Certificates of Sponsorship, employment arrangements, salaries, work locations and permission expiry dates.

The employer should also identify the individuals responsible for sponsorship compliance, including the Authorising Officer and Level 1 User.

Where insolvency is likely to result in redundancies, salary reductions, changes to duties or a business transfer, the immigration implications should be assessed before those decisions are implemented wherever practicable.

Directors should coordinate immigration advice with their insolvency and employment law advisers so that proposed measures can be considered against the relevant legal requirements.

Financial distress alone does not necessarily result in sponsor licence revocation. However, the events arising from financial distress may trigger reporting obligations or affect the organisation’s ability to continue sponsoring workers.

 

2. What Should Directors Review Before Appointing Administrators?

 

Where directors are considering administration, the company’s sponsorship arrangements should form part of the information provided to the proposed administrator.

Directors should establish whether the organisation holds a sponsor licence and identify the employees whose immigration permission depends on that licence.

The administrator should be informed about the sponsorship arrangements as soon as possible.

This is particularly important because the Home Office guidance requires an organisation entering administration to notify the Home Office within 20 working days.

Paragraph C3.2 also requires the appointed administrator or administrative receiver to become the sponsor’s Authorising Officer through the prescribed process.

Before the appointment, directors should therefore identify the existing Authorising Officer, Level 1 User and other individuals involved in sponsorship compliance.

They should also establish whether those individuals are expected to remain with the business.

Where the organisation’s Level 1 User is likely to leave, arrangements for maintaining authorised SMS access should be considered.

Directors should preserve relevant sponsorship records and identify any outstanding Home Office reporting obligations.

They should also disclose any known compliance investigations, licence suspension proceedings or previous breaches.

Providing this information early can help the administrator understand the regulatory position and avoid preventable reporting failures following appointment.

 

3. What Should an Administrator Do Immediately After Appointment?

 

An administrator appointed to a licensed sponsor should undertake an early review of the organisation’s immigration sponsorship arrangements.

The review should establish the sponsor licence status, identify sponsored workers and confirm the applicable Home Office reporting requirements.

The administrator should ensure that the Home Office is notified of the administration within 20 working days.

The administrator must also address the requirement to become the organisation’s Authorising Officer under paragraph C3.2 of the sponsor guidance.

The prescribed procedure depends on whether the existing Level 1 User remains available.

Where the Level 1 User is retained, the appropriate SMS procedures should be followed to update the organisation’s key personnel.

Where the Level 1 User is not retained, the administrator must follow the relevant change of circumstances procedure.

The administrator should establish whether the company remains authorised to sponsor workers and whether its continuing employment arrangements satisfy the applicable requirements.

Any planned redundancies, salary reductions, changes to working hours or business sales should be reviewed for immigration consequences.

Relevant records should be preserved, particularly where HR employees are leaving or business systems may be closed.

The administrator should also identify any outstanding Home Office correspondence or compliance concerns.

Where a business sale is contemplated, the purchaser’s sponsorship position should be considered before completion.

 

4. What Should a Liquidator Do When a Sponsoring Company Enters Liquidation?

 

A liquidator appointed to a company holding a sponsor licence must address the specific Home Office requirements applying to liquidation.

Under paragraph C3.7 of the sponsor guidance, a company entering voluntary or compulsory liquidation must notify the Home Office within 20 working days.

The guidance provides that the Home Office will revoke the organisation’s sponsor licence.

The liquidator should therefore establish whether the required notification has been made and retain evidence of the communication.

Where the Sponsor Management System cannot be accessed, the alternative reporting procedure specified in the Home Office guidance should be followed.

The liquidator should identify all sponsored workers and establish whether their employment has ended or is expected to continue temporarily.

Where sponsored employment terminates, the relevant worker reporting obligations must be considered.

The liquidator should also preserve sponsorship records, including Certificates of Sponsorship, employment documentation and relevant Home Office correspondence.

Where business assets are being sold, the purchaser must not be treated as automatically acquiring the seller’s sponsor licence.

Any proposed transfer of sponsored employees must be assessed under the applicable business-transfer and immigration provisions.

The liquidator should distinguish between the company’s employment obligations, the revocation of its sponsor licence and any subsequent Home Office action affecting individual workers’ immigration permission.

 

5. How Should Insolvency Practitioners Identify Sponsored Workers?

 

Insolvency practitioners should establish which employees require immigration sponsorship before making material workforce decisions.

The organisation’s sponsor licence records and HR systems should provide a starting point.

However, these records may be incomplete or difficult to access where the business has experienced financial distress.

The practitioner should identify the workers currently sponsored by the organisation and establish the immigration routes under which they hold permission.

Relevant information includes:

 

• The worker’s name and employment details.
• The immigration route under which the worker is sponsored.
• The Certificate of Sponsorship assigned to the worker.
• The sponsored occupation and job duties.
• The worker’s salary and working arrangements.
• The location at which the worker undertakes sponsored employment.
• The expiry date of the worker’s immigration permission.
• Any relevant pending immigration applications.
• Any proposed changes to employment or sponsorship.
• Any dependants or settlement-related concerns identified by the worker, where relevant and appropriately disclosed.

 

Information should be collected and handled in accordance with applicable data protection requirements.

The purpose is to establish the organisation’s sponsorship responsibilities and identify workers whose immigration position may be affected by insolvency decisions.

The practitioner should not assume that every overseas employee requires sponsorship or that every employee holding a visa is sponsored by the insolvent organisation.

The relevant immigration status and sponsorship arrangements must be established individually.

 

6. How Should Employers Prioritise Immigration Risks During Insolvency?

 

Where an organisation employs sponsored workers, immigration risks should be assessed according to their legal significance and potential operational consequences.

Immediate attention should be given to statutory or Home Office reporting deadlines, the organisation’s sponsor licence status and any changes affecting its ability to continue sponsoring employees.

For example, the commencement of administration, agreement of a CVA or entry into liquidation may trigger specific 20-working-day notification requirements.

Changes affecting sponsored workers may create separate reporting obligations.

The employer should also identify whether any proposed employment arrangements would breach the conditions of sponsorship.

Salary reductions, changes to duties and termination of employment may require particular attention.

Where a business sale is proposed, the purchaser’s ability to assume sponsorship responsibility should be assessed before completion.

The following table provides a practical risk-prioritisation framework.

 

Priority	Issue	Required consideration
Immediate	Formal insolvency notification	Identify the relevant event and comply with the applicable Home Office reporting deadline.
Immediate	Sponsor licence status	Establish whether the organisation remains authorised to sponsor workers.
Immediate	Authorising Officer during administration	Arrange the mandatory appointment of the insolvency practitioner under the prescribed procedure.
Immediate	SMS access	Ensure that authorised personnel can undertake required sponsorship reporting.
High	Sponsored worker redundancies	Address worker reporting and identify potential immigration consequences.
High	Salary and employment changes	Assess whether revised arrangements satisfy the relevant sponsorship requirements.
High	Proposed business transfer	Confirm successor licensing, reporting and worker transfer requirements.
High	Right to work compliance	Review checking obligations and outstanding follow-up requirements.
Ongoing	Record keeping	Preserve relevant sponsorship and employment records.
Ongoing	Home Office correspondence	Address compliance enquiries, investigations and outstanding notifications.

 

The priorities should be adapted to the organisation’s circumstances.

Where the business is being sold urgently, successor sponsorship may require immediate attention alongside the formal insolvency reporting requirements.

 

7. How Should Employers Manage Sponsored Worker Redundancies?

 

Redundancy decisions affecting sponsored employees must be considered under both employment and immigration law.

The employer must comply with the applicable employment law requirements concerning redundancy.

Where sponsored employment ends, the organisation must also consider its Home Office reporting obligations.

The cessation of sponsorship is generally a reportable worker event subject to a 10-working-day reporting period.

The employer should record the effective termination date and ensure that the relevant notification is made.

Sponsored employees should receive accurate information concerning the termination of their employment and any employment-related entitlements.

However, employers should not make definitive statements about the cancellation of immigration permission without considering the applicable rules and any Home Office decision.

For example, an employee should not be told that their Skilled Worker permission automatically expires on the date of redundancy.

Equally, they should not be assured that they have an automatic 60-day period in which to obtain another sponsor.

Workers should be encouraged to obtain individual immigration advice promptly.

Where a purchaser may retain the workforce, the employer should establish whether qualifying business-transfer arrangements apply before implementing termination and re-engagement proposals.

 

8. How Should Employers Handle Salary Reductions and Workforce Restructuring?

 

Financial distress may lead employers to consider reducing salaries, shortening working hours or changing employee duties.

Where sponsored workers are affected, the employer must establish whether the proposed arrangements remain compliant with the relevant immigration requirements.

For example, a Skilled Worker may be sponsored on the basis of a particular occupation and salary.

A proposed salary reduction could affect whether the employee continues to satisfy the applicable requirements.

Changes to duties may also affect whether the role remains within the occupation for which the worker was sponsored.

The employer must establish whether a change is permitted, whether it is reportable and whether a new immigration application is required.

Agreement between the employer and employee does not automatically make the revised arrangements compliant with immigration law.

Where a company enters administration, the administrator should assess the immigration implications before implementing material changes to sponsored employment.

Where the business is acquired by another organisation, the purchaser should undertake the same assessment before changing transferred employees’ working arrangements.

Immigration advice should be coordinated with employment law advice so that proposed restructuring measures are considered consistently.

 

9. What Should Employers Do if Sponsorship Records Are Missing?

 

Insolvency can result in the loss of access to HR systems, payroll records and sponsorship documentation.

Where records are missing, the organisation should establish what information can be recovered and what obligations remain outstanding.

The employer or insolvency practitioner should identify relevant records held by HR personnel, payroll providers, external immigration advisers and other authorised service providers.

Any recovery or transfer of personal information must comply with applicable data protection requirements.

Where sponsorship records are incomplete, the organisation should identify the gaps and consider appropriate corrective action.

It should not create inaccurate retrospective records or submit information to the Home Office that it cannot substantiate.

Where the missing information affects a reporting obligation, the appropriate procedure should be established promptly.

Where a purchaser intends to retain sponsored workers, incomplete records may affect its ability to meet ongoing sponsorship duties.

The purchaser should therefore identify record-keeping deficiencies during due diligence and establish whether the necessary information can be obtained.

The absence of records should be treated as a compliance issue requiring assessment rather than an administrative inconvenience.

 

10. How Should Employers Deal with Existing Home Office Investigations?

 

A sponsoring organisation may enter insolvency proceedings while subject to a Home Office compliance investigation, licence suspension or other enforcement action.

The insolvency practitioner should establish the status of any outstanding matter and identify relevant deadlines or requests for information.

Existing Home Office correspondence should be preserved.

Where the organisation remains licensed, it must continue meeting the applicable sponsorship obligations.

Where liquidation results in licence revocation, historic compliance matters may nevertheless remain relevant according to the circumstances.

For example, the Home Office may previously have raised concerns about salary compliance, record keeping or the reporting of sponsored worker changes.

Those concerns should not be disregarded simply because the organisation has entered administration or liquidation.

Where directors or connected parties intend to establish a new sponsoring organisation, previous sponsorship compliance history may also require consideration under the Home Office’s eligibility and suitability requirements.

The practitioner should obtain appropriate advice before responding to substantive Home Office allegations or making representations concerning previous compliance failures.

 

11. What Should Purchasers Do Before Completing an Insolvent Business Acquisition?

 

Purchasers intending to retain sponsored workers should complete immigration due diligence before acquiring the business wherever practicable.

The purchaser should establish whether the transaction involves a change in ownership, a qualifying business transfer or the independent recruitment of former employees.

It must also establish whether it holds the necessary sponsorship authorisation.

Where the Home Office’s qualifying business-transfer provisions apply, the successor must satisfy the relevant licensing and reporting requirements.

Where the successor does not hold the appropriate sponsor licence, it may need to apply for authorisation within 20 working days of the transfer.

If the required valid application is not made within 20 working days, or the application is refused, the transferred workers will have their immigration permission cancelled, except any workers who can be sponsored under an appropriate existing licence held by the incoming organisation.

The purchaser should also identify any planned changes to salaries, duties or working arrangements.

Right to work compliance must be considered, including the requirements applicable to qualifying TUPE transfers and the expanded statutory framework effective from 1 October 2026.

Where the acquisition involves substantial reliance on sponsored workers, unresolved immigration issues may affect the commercial viability of the transaction.

The purchaser should therefore establish the necessary sponsorship arrangements before committing to workforce continuity assumptions.

 

12. What Should Employers Consider Under the October 2026 Right to Work Changes?

 

From 1 October 2026, the statutory right to work framework extends to specified working arrangements beyond conventional employment contracts.

These include certain worker contracts, individual subcontracting arrangements and relevant online matching services.

The changes are particularly important where an insolvent business restructures its workforce or where a purchaser adopts new engagement arrangements following an acquisition.

For example, an employer may propose replacing directly employed staff with individual subcontractors.

The employer should establish whether the new arrangements fall within the expanded statutory checking requirements.

The fact that an individual is described as self-employed does not necessarily remove the organisation’s checking obligations.

Employers should also review the digital verification methods used for right to work checks.

Where third-party digital verification services are used, the applicable provider certification and registration requirements must be considered.

The Home Office online checking service should be distinguished from commercial digital verification services.

Employers and purchasers should establish the appropriate checking method for the relevant individual and working arrangement.

Right to work compliance should be considered alongside sponsor licence requirements, but the two regimes should not be treated as interchangeable.

 

13. What Should an Insolvency Immigration Action Plan Include?

 

An immigration action plan can help employers and insolvency practitioners coordinate the legal and administrative requirements arising during insolvency.

The plan should identify relevant events, reporting deadlines, responsible individuals and actions required to protect lawful workforce arrangements.

It should also distinguish between the organisation’s sponsorship obligations and the immigration position of individual workers.

 

Stage	Action	Expected outcome
Initial assessment	Confirm the insolvency procedure, sponsor licence status and sponsored workforce.	Establish the principal immigration risks and obligations.
Reporting	Identify and complete the required Home Office notifications.	Address relevant reporting deadlines.
Governance	Review Authorising Officer, Level 1 User and SMS arrangements.	Maintain appropriate sponsorship oversight and authorised access.
Workforce review	Assess salaries, duties, redundancies and employment changes.	Identify changes affecting sponsorship compliance.
Records	Preserve sponsorship, payroll and right to work documentation.	Maintain evidence required for regulatory compliance.
Business rescue	Assess proposed ownership changes and business transfers.	Establish successor sponsorship requirements.
Employee communications	Provide accurate information to affected sponsored workers.	Reduce uncertainty and avoid misleading immigration assurances.
Ongoing compliance	Review outstanding Home Office matters and new developments.	Maintain an accurate record of actions and unresolved risks.

 

The action plan should be updated as the insolvency proceedings develop.

For example, a company may initially enter administration with the intention of continuing trading but subsequently move towards a business sale or liquidation.

Each development may change the relevant sponsorship requirements.

The plan should therefore be treated as a working compliance document rather than a one-off assessment.

 

14. When Should Specialist Immigration Advice Be Obtained?

 

Specialist immigration advice should be considered where financial difficulties are likely to affect the organisation’s sponsor licence, sponsored employees or ability to continue operating.

Advice may be particularly important where:

 

• The organisation is entering administration or liquidation.
• A CVA or debt restructuring may involve a change in ownership.
• The employer sponsors a significant number of overseas workers.
• Sponsored employees perform roles essential to continued operations.
• Redundancies or salary reductions are proposed.
• The organisation has outstanding Home Office compliance concerns.
• SMS access or sponsorship key personnel arrangements are disrupted.
• A business sale or pre-pack administration is contemplated.
• A purchaser intends to retain sponsored employees.
• The successor organisation does not hold an appropriate sponsor licence.
• Sponsored workers have pending immigration or settlement applications.
• Workforce restructuring creates new right to work checking obligations.

 

Early advice can help establish the relevant legal position before decisions become difficult to reverse.

It can also assist in coordinating Home Office requirements with the commercial objectives of an administration, liquidation or business acquisition.

Where the business is already subject to formal insolvency proceedings, advice should be obtained promptly to identify any outstanding reporting obligations and immediate compliance risks.

 

15. Why Immigration Compliance Should Be Part of Insolvency Governance

 

Immigration sponsorship is a regulatory responsibility that can affect the operational and commercial consequences of insolvency.

For businesses relying on sponsored workers, the loss of sponsorship authorisation may affect workforce availability, business continuity and the feasibility of a rescue transaction.

Administrators and liquidators must therefore understand the Home Office requirements relevant to the insolvency procedure.

Directors should identify sponsorship obligations before implementing major employment or restructuring decisions.

Purchasers should establish whether they can lawfully retain sponsored workers before completing a transaction.

These responsibilities require coordination between insolvency practitioners, management, HR personnel and legal advisers.

A structured approach can help identify reporting obligations, preserve necessary records and ensure that decisions concerning sponsored employees are based on the correct legal position.

Immigration compliance should therefore be incorporated into the organisation’s wider insolvency governance arrangements rather than addressed only after a problem arises.

 

 

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Section H: How DavidsonMorris Can Help

 

DavidsonMorris advises UK employers on business immigration, sponsor licensing and workforce compliance, including the immigration implications of corporate restructuring and insolvency.

Where an organisation holding a sponsor licence experiences financial distress, enters administration or faces liquidation, immigration advice can help establish the relevant Home Office requirements and the consequences for sponsored employees.

Our solicitors work with employers, directors, insolvency practitioners and businesses involved in corporate transactions to address sponsorship obligations and immigration risks.

Our services include:

 

• Sponsor licence insolvency assessments: Reviewing the effect of administration, liquidation, CVAs and other restructuring arrangements on the organisation’s sponsorship authorisation.
• Home Office reporting advice: Identifying relevant notification requirements and advising on changes affecting the sponsoring organisation and its workers.
• Sponsorship governance: Advising on Authorising Officer appointments, key personnel changes and Sponsor Management System requirements.
• Sponsored workforce reviews: Assessing the immigration implications of redundancies, salary changes, employment restructuring and business closure.
• Business rescue and acquisition advice: Reviewing sponsor licensing requirements arising from ownership changes, asset purchases, share acquisitions and qualifying business transfers.
• Successor sponsorship: Advising purchasers on the requirements for assuming sponsorship responsibility and obtaining or extending sponsor licensing authorisation.
• Immigration due diligence: Identifying sponsorship compliance risks and workforce immigration requirements before corporate transactions.
• Right to work compliance: Advising on statutory checking obligations, workforce restructuring and the requirements applicable to transferred employees and other working arrangements.
• Home Office compliance and enforcement: Advising on sponsorship breaches, compliance investigations, licence suspension and revocation risks.

 

Where a business relies on sponsored workers, early immigration advice can help identify issues affecting business continuity and the proposed treatment of employees.

Our approach focuses on establishing the applicable Home Office requirements, identifying practical options and supporting informed decisions about workforce compliance.

For advice on the immigration implications of insolvency, restructuring or a business acquisition, contact DavidsonMorris.

 

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Section I: Conclusion

 

Insolvency can have significant consequences for a UK employer’s sponsor licence and the immigration position of its sponsored workers.

The outcome depends on the insolvency procedure, the organisation’s licence status, whether ownership changes and whether the business or its employees transfer to another legal entity.

Financial distress alone does not automatically revoke a sponsor licence. However, formal insolvency proceedings can trigger specific Home Office requirements.

Where a company enters administration or administrative receivership, it must notify the Home Office within 20 working days. The appointed insolvency practitioner must also become the sponsor’s Authorising Officer through the prescribed procedure.

A company entering a CVA without a change in ownership may be permitted to retain its sponsor licence, provided the applicable Home Office requirements are satisfied.

Where a CVA involves a change in ownership, the Home Office treats the arrangement as a business sale and revokes the existing licence.

Where a company enters voluntary or compulsory liquidation, paragraph C3.7 of the sponsor guidance requires notification within 20 working days and provides that the Home Office will revoke the licence.

These distinctions are important because the loss of sponsorship authorisation can affect employees whose immigration permission depends on the organisation.

However, the commencement of insolvency proceedings does not necessarily mean that every sponsored worker’s immigration permission expires immediately.

Employment termination, sponsor licence revocation and cancellation of individual immigration permission are separate legal events.

The commonly cited 60-day period following loss of sponsorship should not be treated as an automatic entitlement. The worker’s position depends on the applicable Immigration Rules, Home Office policy and any cancellation decision.

Where an insolvent business is sold, the seller’s sponsor licence does not automatically transfer to the purchaser.

Qualifying business-transfer provisions may allow sponsored workers to continue employment without ordinary change-of-employer applications, but the successor must satisfy the relevant licensing and reporting requirements.

Where the successor does not hold the necessary sponsorship authorisation, an application may be required within 20 working days of the transfer.

Employers and purchasers must also consider their right to work obligations, including the expanded statutory framework effective from 1 October 2026.

For directors, administrators, liquidators and prospective purchasers, immigration compliance should therefore form part of insolvency planning from the outset.

Early identification of sponsored workers, accurate Home Office reporting, preservation of records and appropriate successor sponsorship arrangements can help reduce avoidable compliance risks.

Where sponsorship is important to the continued operation or sale of a business, specialist immigration advice can also support decisions concerning business rescue, workforce restructuring and lawful employment continuity.

 

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Section J: Sponsor Licence and Insolvency FAQs

 

Does insolvency automatically cancel a sponsor licence?

No. Financial distress or insolvency does not automatically result in the immediate cancellation of every sponsor licence. The consequences depend on the insolvency procedure and the applicable Home Office rules. Administration, company voluntary arrangements and liquidation are subject to different requirements. For example, an organisation entering administration must notify the Home Office and arrange for the appointed insolvency practitioner to become its Authorising Officer. By contrast, where an organisation enters voluntary or compulsory liquidation, the Home Office guidance provides for revocation of its sponsor licence.

 

Can a company keep its sponsor licence during administration?

A company entering administration may be able to continue sponsoring workers, subject to its licence status and compliance with the applicable Home Office requirements. The organisation must notify the Home Office within 20 working days of entering administration or administrative receivership. The appointed insolvency practitioner must also become the sponsor’s Authorising Officer through the prescribed procedure. Continued trading does not, by itself, guarantee that sponsorship authorisation remains unaffected. The administrator must establish the company’s licence position and ensure that its sponsorship obligations continue to be addressed.

 

Does an administrator have to become the sponsor licence Authorising Officer?

Yes. Paragraph C3.2 of the Home Office Workers and Temporary Workers sponsor guidance requires the appointed administrator or administrative receiver to become the organisation’s Authorising Officer. The appointment must be reflected through the prescribed Home Office procedure. Where the existing Level 1 User remains available, the relevant SMS changes can be undertaken through the authorised process. Where the Level 1 User is not retained, the insolvency practitioner must follow the appropriate change of circumstances procedure. Appointment as administrator does not automatically provide personal access to the Sponsor Management System.

 

What happens to a sponsor licence during liquidation?

Where a company enters voluntary or compulsory liquidation, paragraph C3.7 of the Home Office sponsor guidance requires the organisation to notify the Home Office within 20 working days. The guidance states that the Home Office will revoke the sponsor licence. This applies to both voluntary and compulsory liquidation. The company should not assume that continued registration at Companies House or limited trading during the winding-up process preserves its sponsorship authorisation. The liquidator must also consider the consequences for existing sponsored workers and any outstanding reporting obligations.

 

Can a company retain its sponsor licence under a CVA?

A company voluntary arrangement (CVA) may allow an organisation to retain its sponsor licence where there is no change in ownership, subject to the applicable Home Office requirements. The organisation must notify the Home Office within 20 working days of the CVA being agreed. Where the CVA involves a change in ownership, the Home Office guidance treats the arrangement as a business sale and provides for revocation of the existing licence. The organisation and any successor must therefore consider the relevant licensing and reporting requirements. A CVA should not be assumed to preserve sponsorship automatically.

 

How quickly must insolvency be reported to the Home Office?

The Home Office sponsor guidance establishes specific 20-working-day notification requirements for administration, administrative receivership, agreed CVAs and voluntary or compulsory liquidation. The event triggering the deadline differs according to the procedure. Other developments, such as redundancies or changes affecting individual sponsored workers, may create separate reporting obligations. The cessation of sponsored employment is generally subject to a 10-working-day reporting requirement. Employers and insolvency practitioners should identify each reportable event and apply the relevant deadline rather than assuming that one notification covers every change.

 

Can an insolvent company continue employing Skilled Workers?

Sponsored workers may remain employed during certain insolvency proceedings, particularly where a company continues trading in administration. However, the organisation must establish that it remains authorised to sponsor them and that their employment continues to satisfy the applicable immigration requirements. Where the sponsor licence is revoked, the company cannot continue relying on that licence for sponsorship activity. Employment contracts and immigration sponsorship are separate matters. The fact that an employee remains on the payroll does not independently establish that the organisation retains sponsorship authorisation.

 

Does a Skilled Worker visa automatically expire when the employer becomes insolvent?

No. The commencement of insolvency proceedings does not necessarily cause a Skilled Worker’s immigration permission to expire immediately. However, termination of sponsored employment or revocation of the employer’s sponsor licence may provide grounds for the Home Office to cancel or shorten that permission. The consequences depend on the applicable Immigration Rules, Home Office policy and the worker’s individual circumstances. Employees should not assume that their permission remains valid until its original expiry date regardless of the loss of sponsorship. Equally, employers should not tell workers that their visas automatically expire on the date of insolvency.

 

Do sponsored workers automatically have 60 days to find another sponsor?

No. There is no automatic entitlement to a new 60-day period simply because an employer enters insolvency, makes a worker redundant or loses its sponsor licence. Where the licence is revoked and the worker was not actively or knowingly complicit, the Home Office will normally shorten permission to 60 calendar days if more than 60 days remain; where 60 days or less remain, permission will normally not be shortened further. The period runs from the effective date of the cancellation decision, not automatically from the insolvency or redundancy date.

 

Can sponsored employees transfer to a purchaser without applying for new visas?

Yes, where the Home Office’s qualifying business-transfer provisions apply and the relevant conditions are satisfied. Sponsored workers transferring under TUPE or similar protection may be able to continue employment with the successor organisation without making ordinary change-of-employer immigration applications. However, the seller’s sponsor licence does not transfer to the purchaser. The successor must accept sponsorship responsibility and satisfy the applicable licensing and reporting requirements. Where the transfer does not qualify under the relevant provisions, ordinary sponsorship and immigration application requirements may apply.

 

Does TUPE transfer a sponsor licence to the new employer?

No. TUPE may protect employment rights during a qualifying business transfer, but it does not transfer the seller’s sponsor licence. The Home Office has separate rules governing the treatment of sponsored workers affected by qualifying transfers. An appropriately authorised successor may be able to assume sponsorship responsibility without the workers making ordinary change-of-employer applications, provided the relevant conditions are satisfied. The application of TUPE must also be assessed carefully in insolvency transactions because different insolvency proceedings can have different employment law consequences.

 

What if the purchaser does not have a sponsor licence?

Where a qualifying business transfer occurs and the successor does not hold the necessary sponsorship authorisation, it must make the required valid application within 20 working days of the transfer. If it does not, or the application is refused, the transferred workers will have their immigration permission cancelled, except any workers who can be sponsored under an appropriate existing licence held by the incoming organisation. The purchaser should therefore assess its ability to obtain authorisation before completing the acquisition.

 

Can a sponsor licence be sold with an insolvent business?

No. A sponsor licence cannot be sold, assigned or transferred as a business asset. It is Home Office authorisation granted to a specific legal entity. A purchaser acquiring an insolvent company’s assets, trading name, premises or customer contracts does not automatically acquire the seller’s sponsorship authorisation. Where sponsored workers transfer as part of a qualifying business transaction, the successor must comply with the relevant Home Office provisions. The ability to assume responsibility for transferred workers should not be confused with transferring the original sponsor licence.

 

Can a company in liquidation assign new Certificates of Sponsorship?

The Home Office guidance provides for revocation of the sponsor licence where a company enters voluntary or compulsory liquidation. Once the licence has been revoked, the company cannot assign new Certificates of Sponsorship under that licence. Unused CoS allocations do not create an independent entitlement to sponsor workers after revocation. A liquidator should not assume that the organisation can continue assigning Certificates of Sponsorship because the company remains registered or continues limited trading. Any proposed sponsorship activity must be assessed against the organisation’s actual licence status.

 

Can unused Certificates of Sponsorship be transferred to a buyer?

No. Unused Certificates of Sponsorship and CoS allocations cannot simply be transferred to a purchaser as part of a business sale. Sponsorship authorisation is linked to the licensed legal entity. Where the purchaser intends to sponsor additional workers, it must hold the appropriate authorisation and satisfy the relevant requirements for assigning Certificates of Sponsorship. Separate provisions may apply to existing sponsored employees transferring under qualifying business-transfer arrangements. Those provisions do not amount to a transfer of the seller’s unused CoS allocation.

 

Can a company reduce sponsored workers’ salaries during administration?

Proposed salary reductions must be assessed against the immigration requirements applicable to the sponsored employees. For example, a Skilled Worker may need to continue satisfying the relevant salary requirements for their sponsored role. A reduction could create a compliance issue or require a report to the Home Office. Certain permitted absences or circumstances may be subject to specific rules or exceptions. The employee’s agreement to a contractual reduction does not automatically make the arrangement immigration-compliant. Administrators should obtain advice before implementing salary or working-hours changes affecting sponsored workers.

 

Can sponsored employees be made redundant during insolvency?

Yes. Sponsored employees may be made redundant during insolvency, subject to the applicable employment law requirements. However, termination of sponsored employment creates additional immigration considerations. The employer must address the relevant Home Office reporting obligations, generally within 10 working days of the reportable event. The Home Office may subsequently take action affecting the worker’s immigration permission. Employees may also have rights to statutory redundancy payments, notice pay or other employment-related sums. Those rights should be considered separately from their immigration position.

 

Can a sponsored worker find another employer after redundancy?

A sponsored worker may be able to obtain employment with another organisation holding the appropriate sponsor licence. For an ordinary change of sponsoring employer under the Skilled Worker route, the new employer will generally need to assign a Certificate of Sponsorship and the worker will need to apply to update their immigration permission. The proposed role must satisfy the applicable requirements. The worker should not assume that a job offer alone permits them to begin working for the new employer. The relevant immigration application and right to work requirements must be satisfied.

 

Can former directors establish a new company and sponsor the same employees?

Former directors may establish a new company and seek to employ workers previously sponsored by an insolvent business. However, the new company does not automatically inherit the former employer’s sponsor licence. It must establish whether it requires a new licence and whether the relevant Home Office eligibility and suitability requirements are satisfied. Where the new company acquires the business through a qualifying transfer, the successor sponsorship provisions may apply. Otherwise, ordinary sponsorship and immigration requirements may be necessary. Previous sponsorship compliance history may also be relevant to the Home Office’s assessment.

 

Does a share purchase affect the sponsor licence?

Yes. Although a share purchase may leave the employing legal entity unchanged, where the transaction constitutes a relevant change in direct ownership under C4.5, the existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. A new application will then be required where appropriate. Purchasers should not assume that retaining the same company registration number automatically preserves sponsorship authorisation.

 

Can insolvency affect a Skilled Worker’s settlement application?

Yes. Employer insolvency may affect a Skilled Worker’s ability to satisfy the requirements for indefinite leave to remain, particularly where the worker’s employment ends or the sponsor licence is revoked. Settlement eligibility depends on the applicable Immigration Rules, including relevant qualifying residence and sponsorship requirements. Changing employers does not necessarily mean that previous qualifying residence is lost, but the worker must maintain the required immigration status and satisfy the relevant conditions. Employees approaching settlement eligibility should obtain individual advice before making an application or changing sponsorship arrangements.

 

What happens to the dependants of sponsored workers?

Dependants whose immigration permission is linked to a sponsored worker may be affected if the principal worker loses sponsorship or their immigration permission is cancelled. However, the consequences depend on the applicable Immigration Rules and any relevant Home Office decisions. Dependants do not necessarily lose their permission automatically on the date the sponsoring employer enters insolvency. Families should establish the principal worker’s immigration options and consider whether any new application or change of status affects the dependants. Individual advice may be important where family members have different immigration expiry dates or circumstances.

 

Do right to work checks still apply during insolvency?

Yes. Insolvency does not automatically remove an organisation’s obligations under the UK’s right to work framework. Where a business continues employing or engaging individuals during administration, it must consider the applicable checking requirements. From 1 October 2026, the statutory framework also extends to specified additional working arrangements, including certain worker contracts, individual subcontracting arrangements and relevant online matching services. Employers must distinguish between right to work compliance and sponsor licence compliance. Holding a sponsor licence does not, by itself, establish that the prescribed right to work checks have been completed.

 

What if the administrator or liquidator cannot access the SMS?

The organisation must follow the appropriate Home Office procedure rather than using another individual’s login credentials. During administration, the appointed insolvency practitioner must become Authorising Officer, and the procedure for changing key personnel depends on whether the existing Level 1 User remains available. Where the Level 1 User is not retained, the relevant change of circumstances procedure must be followed. In liquidation, paragraph C3.7 provides an alternative notification route through the Sponsorship Compliance Team where the SMS cannot be accessed. Loss of SMS access does not remove the underlying reporting obligations.

 

When should an employer obtain immigration advice about insolvency?

Employers should consider specialist immigration advice as soon as financial difficulties are likely to affect their sponsor licence, sponsored workforce or business structure. Advice is particularly important before administration, liquidation, a CVA, substantial redundancies, salary reductions or a business sale. Insolvency practitioners should also establish the sponsorship position promptly following appointment. Purchasers should undertake immigration due diligence before acquiring a business employing sponsored workers. Early advice can help identify reporting deadlines, licensing requirements, worker immigration consequences and risks affecting business continuity.

 

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Section K: Glossary

 

Term	Meaning
Administration	A formal insolvency procedure in which an appointed administrator manages a company’s affairs, business and property with a view to achieving one of the statutory purposes of administration. Where the company holds a sponsor licence, specific Home Office reporting and Authorising Officer requirements apply.
Administrator	A licensed insolvency practitioner appointed to administer a company. Under the Home Office sponsor guidance, an appointed administrator must become the sponsoring organisation’s Authorising Officer through the prescribed procedure.
Administrative Receivership	An insolvency procedure involving the appointment of an administrative receiver over a company’s assets under qualifying security arrangements. The Home Office sponsor guidance contains specific notification and Authorising Officer requirements for sponsoring organisations entering administrative receivership.
Authorising Officer	The individual with overall responsibility for a licensed organisation’s sponsorship activities and compliance. In administration or administrative receivership, the appointed insolvency practitioner must assume this role in accordance with the Home Office guidance.
Business Transfer	A transaction in which business operations, assets or an undertaking move from one organisation to another. Where sponsored workers are affected, the Home Office’s business-transfer provisions may apply, depending on the circumstances.
Certificate of Sponsorship (CoS)	An electronic sponsorship record assigned by a licensed sponsor to a worker in connection with an immigration application. A Certificate of Sponsorship is not a visa and cannot simply be sold or transferred as a business asset.
Company Voluntary Arrangement (CVA)	A statutory arrangement between a company and its creditors concerning the repayment or compromise of debts. A CVA without a change in ownership may allow sponsorship to continue, subject to the applicable Home Office requirements. Different consequences arise where ownership changes.
Compulsory Liquidation	A formal winding-up procedure generally following a court order. Where a licensed sponsor enters compulsory liquidation, the Home Office guidance requires notification within 20 working days and provides for revocation of the sponsor licence.
Creditors’ Voluntary Liquidation (CVL)	A voluntary liquidation procedure used by an insolvent company to wind up its affairs. The Home Office’s liquidation provisions apply where the company holds a sponsor licence.
Digital Verification Service	A service used to verify identity or relevant documentation digitally. Where such a service is used for statutory right to work purposes, the applicable Home Office requirements, including relevant provider certification and registration rules, must be considered.
Dissolution	The legal process through which a company ceases to exist as a registered entity. Dissolution is distinct from sponsor licence revocation, which concerns the withdrawal of Home Office sponsorship authorisation.
Home Office	The UK government department responsible for immigration control and the administration of the sponsor licensing system.
Immigration Permission	Permission granted to an individual to enter or remain in the UK under the applicable Immigration Rules. Sponsored workers’ permission may be affected by changes to their employment or the status of their sponsor.
Insolvency Practitioner	A suitably authorised professional who undertakes specified functions in formal insolvency proceedings, including acting as an administrator or liquidator.
Key Contact	The individual designated as the main point of contact between a licensed sponsor and the Home Office in relation to the sponsor licence.
Level 1 User	An authorised user with responsibility for undertaking permitted sponsorship management functions through the Sponsor Management System. Level 1 User arrangements are particularly important where insolvency results in management or HR personnel changes.
Liquidation	A formal procedure for winding up a company’s affairs, realising assets and distributing available funds in accordance with the applicable law. The Home Office guidance provides for revocation of a sponsor licence following voluntary or compulsory liquidation.
Liquidator	An insolvency practitioner or other authorised office-holder responsible for administering the liquidation of a company. Where the company holds a sponsor licence, the liquidator should address the relevant Home Office notification and workforce implications.
Pre-Pack Administration	An administration in which the sale of a company’s business or assets is arranged before the administrator’s appointment and completed shortly afterwards. Where sponsored employees transfer, the purchaser’s sponsorship arrangements must be assessed.
Right to Work Check	A check undertaken in accordance with the applicable Home Office requirements to establish an individual’s right to undertake relevant work in the UK. Prescribed checks may provide a statutory excuse against civil penalty liability in the circumstances covered by the legislation.
Sponsor Licence	Home Office authorisation allowing an eligible organisation to sponsor qualifying workers under specified UK immigration routes. A sponsor licence is granted to a legal entity and cannot simply be transferred to another organisation.
Sponsor Licence Revocation	The withdrawal of sponsorship authorisation by the Home Office. Revocation prevents the organisation from continuing sponsorship activity under the revoked licence and may affect the immigration permission of existing sponsored workers.
Sponsor Licence Surrender	The voluntary relinquishment of a sponsor licence by the sponsoring organisation. Surrender is distinct from Home Office revocation and must be considered under the applicable sponsor guidance.
Sponsor Management System (SMS)	The Home Office’s online system through which licensed sponsors manage specified sponsorship activities, including assigning Certificates of Sponsorship and reporting relevant changes. Access is restricted to authorised users and subject to applicable security requirements.
Sponsored Worker	An individual whose immigration permission is connected to sponsorship by an authorised UK organisation under a relevant sponsored immigration route.
Successor Sponsor	An organisation assuming responsibility for sponsored workers following a qualifying business transfer, subject to the applicable Home Office licensing and reporting requirements.
TUPE	The Transfer of Undertakings (Protection of Employment) Regulations 2006. TUPE provides employment protections in qualifying business transfers, subject to the applicable conditions and insolvency provisions. It does not automatically transfer a sponsor licence.
Skilled Worker Visa	A UK immigration route allowing eligible individuals to undertake qualifying employment with an appropriately licensed sponsor, subject to the relevant Immigration Rules.
Statutory Excuse	A legal defence against liability for a civil penalty under the relevant illegal working legislation, available where an organisation has completed the prescribed right to work checks and satisfied the applicable conditions.
Change of Ownership	A change affecting the ownership or control of a sponsoring organisation. Certain ownership changes trigger sponsor licence revocation and new licensing requirements under the Home Office guidance.
Workforce Compliance	The processes and controls through which an organisation meets relevant legal obligations concerning its workforce, including immigration sponsorship, right to work checks, employment arrangements and regulatory reporting.
Business Rescue	Measures intended to preserve a financially distressed business or its operations, potentially through administration, restructuring, creditor arrangements or a sale. Where the business employs sponsored workers, immigration sponsorship requirements may affect the rescue strategy.

 

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Section L: Useful Links

 

The following official resources provide further information about UK sponsorship requirements, insolvency procedures, immigration permission and the rights of employees affected by employer insolvency.

 

Description	URL
Home Office Sponsor Guidance: Part 3 — Sponsor Duties and Compliance Principal Home Office guidance on sponsor duties, organisational changes, insolvency reporting, compliance and business transfers, including sections C3 and C4.	https://www.gov.uk/government/publications/workers-and-temporary-workers-guidance-for-sponsors-part-3-sponsor-duties-and-compliance
Home Office Sponsor Guidance: Part 2 — Sponsor a Worker Home Office guidance on sponsoring individual workers, Certificates of Sponsorship and requirements associated with sponsored employment.	https://www.gov.uk/government/publications/workers-and-temporary-workers-guidance-for-sponsors-part-2-sponsor-a-worker
Home Office Sponsor Guidance: Part 1 — Apply for a Licence Home Office guidance on sponsor licence eligibility and suitability, relevant to successor organisations and purchasers requiring sponsorship authorisation.	https://www.gov.uk/government/publications/workers-and-temporary-workers-guidance-for-sponsors-part-1-apply-for-a-licence
Immigration Rules: Appendix Skilled Worker The Immigration Rules governing Skilled Worker sponsorship, applications, permission and settlement requirements.	https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-skilled-worker
Immigration Rules: Part 9 — Grounds for Refusal Immigration Rules covering grounds for refusal and cancellation of immigration permission, relevant where sponsorship is lost.	https://www.gov.uk/guidance/immigration-rules/immigration-rules-part-9-grounds-for-refusal
Skilled Worker Visa: Update Your Visa if You Change Job or Employer Official guidance for Skilled Workers changing sponsoring employer or making certain changes to sponsored employment.	https://www.gov.uk/skilled-worker-visa/update-your-visa-if-you-change-job-or-employer
Employer’s Guide to Right to Work Checks Home Office guidance on prescribed right to work checks, statutory excuses and employer responsibilities.	https://www.gov.uk/government/publications/right-to-work-checks-employers-guide
Check a Job Applicant’s Right to Work Government guidance on the available methods for checking an individual’s right to work in the UK.	https://www.gov.uk/check-job-applicant-right-to-work
Insolvency Act 1986 Primary legislation governing important aspects of UK corporate insolvency, including administration and liquidation.	https://www.legislation.gov.uk/ukpga/1986/45/contents
Transfer of Undertakings (Protection of Employment) Regulations 2006 Legislation protecting employment rights in qualifying business transfers, including provisions relevant to certain insolvency proceedings.	https://www.legislation.gov.uk/uksi/2006/246/contents
Your Rights if Your Employer Is Insolvent Government guidance on employment rights and potential payments where an employer becomes insolvent.	https://www.gov.uk/your-rights-if-your-employer-is-insolvent
Apply for Redundancy and Other Money Owed Government guidance on claiming eligible redundancy and other employment-related payments where an employer is insolvent.	https://www.gov.uk/claim-redundancy

 

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