Revocation of sponsorship licences; don’t let it happen to your organisation

It’s no news that the social care sector in the UK is reliant on sponsored workers; rough estimates show that well over 150,000 care workers and senior care workers have entered the sector through sponsored work routes over the last two years alone.  

This greater reliance, however, is being matched by the Home Office’s increased scrutiny of providers’ compliance – around 3,000 sponsor licences were revoked in 2025 alone. See our blog from earlier this year. We have advised clients successfully on responding to these somewhat draconian measures and were further encouraged by the recent High Court case of Moon Fish Ltd (MFL) v Secretary of State for the Home Office. 

Learning point – the UKVI is more “ruthless” in its approach to certificates of sponsorship, but they don’t always get it right.

Case details

MFL sponsored and employed three migrant workers as a licensed sponsor under the Skilled Worker Route. In May and June 2025, one of MFL's sponsored workers had been paid less than his headline salary. The reason being that he was on agreed, unpaid compassionate leave for that period. This period of unpaid leave was neither a breach of employment legislation nor was it a breach of the sponsorship regime. MFL, however, failed to report the period of non-payment to the Home Office. 

On 20 October 2025, the Home Office wrote to MFL stating that it was investigating concerns that sponsored workers might not be receiving the salary stated on their Certificate of Sponsorship, citing Annex C1(aa) of the Sponsor Guidance and requesting payroll and employment records. This request from the Home Office did not identify the particular worker nor the payment of concern. Neither did the Home Office seek an explanation from MFL about the discrepancy. 

On 18 November 2025, the Home Office informed MFL that their sponsor licence was being revoked with immediate effect.  Its reasoning? The unreported shortfall in pay satisfied the mandatory ground for revocation in Annex C1(aa). 

On 5 December 2025, MFL explained in a pre-action letter to the Home Office the circumstances of the lesser payment and the details of the compassionate leave, noting that the failure to report was an administrative error and was not grounds for mandatory revocation under Annex C1(aa). The Home Office refused to change its decision and the licence remained revoked. Faced with this, MFL applied for a judicial review of the decision, which was heard on 30 July 2026.   

There were a number of issues; the key ones for us are:

• Could the Home Office use the mandatory grounds for revocation under Annex C1(aa) in these circumstances, and 
• Was the revocation procedurally unfair because MFL had not been given sufficient time or opportunity to explain the underpayment?

Court’s decision

Grounds for revocation 

Annex C1 of the guidance outlines the circumstances in which the Home Office “reserve[s] the right to revoke your licence immediately without suspending it."

The Home Office relied on reason C1(aa) - you pay a sponsored worker less than you said you would on the worker’s CoS, and either: you have not notified us of the change in salary or the reduction is not otherwise permitted by the Immigration Rules or sponsor guidance. 

The High Court disagreed with the Home Office’s use of this mandatory reason to revoke the licence.  The Court held that a reduced payment arising from a period of permitted unpaid leave does not, without more, constitute a “change in salary.” MFL accepted they failed to report the period of non-payment, but that was not serious enough to warrant the application of reason C1(aa) – failure to report is a breach of C2(a) duties and a failure of those duties was not a mandatory ground for suspension.  C2(a) requires a different discretionary process of analysis from the Home Office, although it’s worth noting that licences can still be revoked for this reason. 

Procedural unfairness

The Court held that the Home Office’s request for documentation on 20 October was not sufficient – the Home Office is required to provide the gist of the specific concern expressed to the sponsor and to give them a reasonable opportunity to respond and address the seriousness of the alleged breach and a potential revocation.  The correspondence sent to MFL referred generally to concerns about salary compliance and documentation but did not identify the worker concerned or the discrepancy they had noted. 

Learning Points 

• This judgement does not change the law or process regarding sponsorship licences – the demands of the regime and guidance with regard to reporting remain the same.  What it does teach us, however, is that the Home Office will not necessarily always get it right. 
• Sponsoring employers should provide comprehensive responses to the Home Office even if their requests are opaque and lack detail.  MFL did not follow up on the 20 October request from the Home Office nor provide any explanation of documentation, etc. We would advise employers to start a dialogue, not be content to stay on the back foot but try and find out more about the issues being investigated and present documentation and reasoning to back up any anomalies. 
• Failures to report continue to be taken seriously by the Home Office even when, as in this case, it was an administrative error with no more onerous undertones. Sponsors should have robust processes in place to identify and report both salary changes and reportable periods of absence affecting sponsored workers, even where the underlying absence is permitted under the Immigration Rules. Such changes will generally need to be reported via the SMS within 10 working days. As the Home Office continues to increase data sharing with HMRC, discrepancies between a worker's reported salary and payroll records are more likely to be identified, potentially bringing any associated reporting failures to light. Whilst the Court found that the Home Office had incorrectly applied the mandatory revocation provisions in this case, the failure to comply with reporting duties nevertheless constituted a breach of sponsor obligations. Sponsors should therefore not assume that a reduction in salary arising from an authorised absence removes the need to consider whether a report is required. Non-compliance with reporting duties may result in enforcement action, including licence downgrading, suspension or revocation, depending on the circumstances. It is better to have robust systems in place so that these hiccups don’t arise or, when they do, they are swiftly dealt with.
• Audit your processes regularly – this is one of the most effective ways of ensuring your systems are robust, your reporting is compliant and there are no changes or absences, etc which are falling between the cracks. We can help carry out these audits. 
• Seek advice if the Home Office acts – the Home Office is increasingly robust in their actions but that does not mean (as noted above) that they are always applying the guidance correctly. Do seek advice as to how to respond, what documentation to send and how to manage the process. We have successfully made representations for a number of clients who have been threatened with revocation or suspension and responding quickly with the appropriate information is crucial. 

If you have any concerns or would like further advice on this issue, please contact our team for further information at employmentandpensions@anthonycollins.com.