By Sunny Sandhu, Senior Immigration Associate, AY&J Solicitors
Getting a sponsor licence feels like the finish line. In reality it is the moment the Home Office starts watching. Sunny Sandhu of AY&J Solicitors on the duties that catch founders out, and the fines that follow.
You found the engineer you needed. They happen to live in Lagos, or Bangalore, or Sao Paulo, and after weeks of paperwork the sponsor licence lands in your inbox. It feels like the hard part is over. For most founders, it is actually the moment the risk begins.
In the first half of 2026 the Home Office issued around 74 million pounds in civil penalties to more than 1,200 businesses for illegal working. A growing share of those were not rogue employers cutting corners. They were ordinary companies, many of them small and fast-growing, that held a licence and simply did not keep up with what the licence obliged them to do.
What You Actually Signed Up For
A sponsor licence is not a permit you file away. It is a standing set of legal duties that begin the day it is granted. You must carry out and correctly record a right to work check for every sponsored worker before they start. You must keep specified documents on file. You must monitor that each worker is doing the role and being paid the salary set out on their Certificate of Sponsorship. And you must report certain changes to the Home Office, usually within ten working days, through the Sponsorship Management System: a start date that moves, a worker who leaves early, a change of role, a change of your own company address.
There is no grace period. The duties are live from day one, and the burden sits with you, not with the worker and not with the caseworker who approved the licence.
Why Founders Get Caught, Not Cowboys
The businesses that run into trouble are rarely the ones acting in bad faith. They are the ones moving quickly. The person who managed the licence application leaves. Right to work checks get done informally, or not repeated when a visa is due to expire. A reportable change happens during a product launch and nobody logs it. None of this looks like wrongdoing from the inside, but on a Home Office audit it reads as a failure to meet duties, and the licence is what pays for it.
This is the practical work we do at AY&J Solicitors, a Legal 500 ranked UK immigration firm. Our sponsor licence compliance work is almost never about deliberate rule-breaking. It is about founders discovering, usually under time pressure, that the licence carried obligations they were never walked through. The fix is almost always cheaper before an inspection than after one.
That is why our sponsor licence compliance work starts with a mock audit: the same documents, checks and records a Home Office officer would ask to see, reviewed while there is still time to put things right.
“Founders tend to treat the licence as the finish line, when it is really the starting gun,” says Yash Dubal, CEO of AY&J Solicitors. “The day it is granted is the day the reporting duties begin. The ones who stay safe are not the ones with the biggest legal budget. They are the ones who decided early who owns compliance and built it into how they hire.”
What a Slip Actually Costs
The numbers are not abstract. A failed right to work check can bring a civil penalty of up to 45,000 pounds per worker for a first breach and 60,000 pounds for a repeat. But for a sponsored business the licence itself is the bigger exposure. It can be downgraded, suspended or revoked, and when a licence goes, the visas of the workers it supports are cut short with it. For a startup that hired from overseas precisely because the skills were hard to find at home, losing the licence can mean losing the team.
The exposure is also widening. From 1 October 2026 the right to work regime is being extended beyond conventional employees to cover contractors and gig economy workers, which pulls a whole layer of arrangements that founders think of as flexible into the same checking obligations.
The System That Keeps You Safe
None of this requires a compliance department. It requires a habit. A short sanity check will tell most founders where they stand:
Is there one named person who owns sponsor compliance, and do they know the ten working day reporting deadlines?
- Are your right to work checks current, including the follow up check before a visa expires?
- Could you produce complete records for every sponsored worker if the Home Office asked tomorrow, not next month?
- Do you know which of your people are sponsored, and which of your contractors will be caught by the October 2026 changes?
If those questions make you uneasy, you are not in crisis, but you are carrying more risk than you need to. The founders who keep hiring the best people from anywhere in the world are simply the ones who treat compliance not as the price of the last hire, but as part of the next one.
AY&J Solicitors is an SRA regulated, Legal 500 ranked UK immigration law firm that helps founders and scale-ups get their sponsor licences and compliance right from the start. If your business has recently taken on its first sponsored hire, a review now is far cheaper than a fix later.
Figures reflect Home Office illegal working enforcement data for H1 2026 and published civil penalty levels, and the right to work changes taking effect from 1 October 2026.
