If your business holds a sponsor licence, the Sponsor Management System — commonly referred to as the SMS — is the online platform through which you manage almost everything related to your sponsored workers. It’s where Certificates of Sponsorship are assigned, where changes are reported, and where the Home Office expects you to keep your house in order on an ongoing basis.
Most licence suspensions and compliance actions don’t happen because employers are acting in bad faith. They happen because the SMS wasn’t used correctly, reporting deadlines were missed, or nobody in the organisation had a clear enough picture of what the rules actually required. This guide sets out what best practice looks like — and what tends to go wrong.
What the SMS Is and Who Has Access
The SMS is a secure online portal managed by UK Visas and Immigration. Access is granted to specific individuals within your organisation — your Level 1 and Level 2 Users — and these roles carry distinct responsibilities.
Your Level 1 User has the broadest access. They can assign Certificates of Sponsorship, report changes, add or remove other SMS users, and carry out most of the day-to-day functions associated with the licence. Level 1 Users must be employed by your organisation or, in certain circumstances, be a legal representative. They are not allowed to be a person who has been convicted of specific offences or who is subject to certain immigration restrictions.
Your Level 2 User has more limited access — they can assign CoS and carry out reporting functions, but cannot manage other users or access all parts of the system.
Your Authorising Officer is ultimately responsible for the licence, even though they may not be the person logging into the SMS day to day. They are the most senior person accountable for everything that happens through it.
Getting this structure right from the outset is part of good sponsor licence compliance. If key personnel change — if your Authorising Officer leaves, or if a Level 1 User moves on — that needs to be updated in the SMS promptly. Failing to maintain accurate key personnel records is one of the compliance failures the Home Office looks for, and it’s entirely avoidable.
Reporting Duties: What Needs to Be Reported and When
This is where many employers come unstuck. The SMS is the channel through which you report significant changes involving your sponsored workers and your organisation. There are two key timeframes you need to internalise.
Within 10 working days, you must report:
- A sponsored worker failing to turn up to start work on their first day
- A sponsored worker being absent from work for more than 10 consecutive working days without your permission and without a reasonable explanation
- A sponsored worker’s employment being terminated early — regardless of the reason
- A significant change in the worker’s duties, where the role has changed to the point that it’s no longer the job described in the Certificate of Sponsorship
- A sponsored worker being subject to a TUPE transfer to a different employer
Within 20 working days, you must report changes to your own organisation that affect the licence, including:
- A change of address for any of your sites where sponsored workers are employed
- A change in your organisation’s legal status — for example, a change of legal entity, a merger, or an acquisition
- The business ceasing to trade or entering administration
- Any criminal convictions received by your key personnel
These deadlines are firm. The Home Office does not extend them because you were busy, because you didn’t know about the change until later, or because you were waiting to see whether the situation resolved itself. The 10-working-day clock starts running from the date the event occurs — not from the date you became aware of it. If your HR team doesn’t have a process for flagging these events to whoever manages the SMS, that gap needs to be closed.
As part of ongoing skilled worker immigration uk compliance, the SMS also needs to reflect the accurate details of each sponsored worker’s role at all times. If a worker’s salary increases, their job title changes, or they move to a different work location, you need to assess whether that change triggers a reporting obligation — and in some cases, whether a fresh Certificate of Sponsorship is required.
Tracking Absences: A Practical Approach
Absence monitoring is one of the most commonly mismanaged aspects of sponsor compliance. The rules around absences matter for two reasons: first, because unexplained or unauthorised absences need to be reported via the SMS within the timeframes set out above; and second, because absence records feed directly into a sponsored worker’s eligibility for indefinite leave to remain, and gaps or inconsistencies in those records can create serious problems down the line.
Your organisation should have a clear, written process for recording and monitoring all absences for sponsored workers — not just the same attendance tracking you apply to your wider workforce, but a specific system that flags absences in a way that allows you to assess whether your SMS obligations are triggered.
In practical terms, this means:
- Every sponsored worker’s absence should be logged from day one, distinguishing between authorised leave (holiday, sick leave, maternity/paternity leave) and unexplained absences
- Your HR team or SMS manager should receive automatic notifications when a sponsored worker has been absent for more than a set number of days, giving time to investigate and report if necessary before the deadline
- Records of absences — including dates, reasons, and any correspondence with the worker — should be retained and stored securely, easily accessible in the event of a compliance visit
It’s also worth noting that absences from the UK can be relevant in a different way. For workers building towards indefinite leave to remain after five years in the UK, the number of days spent outside the UK matters. While tracking overseas absences is primarily the worker’s responsibility, employers who maintain detailed records are in a much better position to help their sponsored workers if questions arise at settlement stage.
A-Rating vs B-Rating: What the Difference Means in Practice
When your sponsor licence is granted, it comes with an A-rating. This is the standard rating and means you’re considered a compliant sponsor. If the Home Office has concerns — following a compliance visit, an audit, or a pattern of reporting failures — your licence can be downgraded to a B-rating.
A B-rating is not just an administrative inconvenience. It has real practical consequences. While on a B-rating, you cannot assign new Certificates of Sponsorship until you have submitted an Action Plan to the Home Office, paid the Action Plan fee (currently £1,476), and had that plan accepted. The Action Plan sets out what steps you will take to address the compliance failures identified. Only once the Home Office is satisfied that you’ve met those steps will your rating be restored to an A.
The cost and disruption involved in recovering from a B-rating is far greater than the cost of maintaining good compliance in the first place. Recruitment plans stall, sponsored workers’ extensions cannot be supported, and the management time required to deal with the process is significant.
If the failings are serious enough, downgrading doesn’t stop at a B-rating — the Home Office can move to suspend or revoke the licence entirely. Our guide to sponsorship licence revoked situations covers what happens at that stage and what options you have, but the clear takeaway is that prevention is always preferable.
Building an Internal Audit Routine
The best-run sponsor licence holders don’t wait for the Home Office to find problems — they find them first. An internal audit routine, carried out at least once a year, should cover:
SMS accuracy — Log into the SMS and check that every sponsored worker’s record accurately reflects their current role, salary, and work location. Check that key personnel records are up to date and that any former users have had their access removed.
Right to work checks — Review your records for all sponsored workers to confirm that right to work checks were carried out correctly before employment began and that any time-limited permissions have been re-checked and re-documented. The Home Office looks at this closely during compliance visits. Our news piece on understanding sponsor licence compliance gives a useful overview of the areas typically scrutinised.
Certificates of Sponsorship — Check that every current CoS reflects the actual role being performed, at the salary being paid, at the correct location. A CoS that no longer matches reality is a compliance problem waiting to be discovered.
Reporting history — Review what changes have occurred in the past twelve months and check that everything that needed to be reported was reported on time. If you find gaps, document them and take legal advice on how to handle them before they’re discovered by the Home Office.
Contracts and payslips — Ensure payslip records are consistent with the salary stated on the CoS. Discrepancies between contractual pay and actual pay are a red flag.
The recent changes in UK immigration rules have added further complexity to sponsor duties in some areas. Staying current with guidance updates is part of the job — the sponsor guidance is revised regularly, and what was correct practice two years ago may not reflect current requirements.
Changes to Your Organisation: Don’t Assume They Don’t Need Reporting
A common area of risk is changes to the business itself that sponsors either don’t realise need reporting, or report too late. If your company changes its name, moves premises, changes its legal structure, or goes through a merger or acquisition, the SMS needs to reflect that.
This is particularly relevant for fast-growing businesses. A company that is scaling quickly — perhaps bringing in overseas talent through skilled worker immigration uk routes or expanding through a uk expansion worker visa structure — may be changing rapidly in ways that have compliance implications. The obligation to report applies regardless of how busy or complex your corporate structure is becoming.
For businesses considering whether to support their directors through a uk self sponsorship visa arrangement, the compliance obligations are the same as for any other licensed sponsor — and in some respects demand even closer attention, given the scrutiny that self-sponsorship structures attract.
The May 2025 Immigration White Paper proposed further changes to the compliance and enforcement framework for sponsors. While not all proposals are yet in force, staying aware of the direction of travel is sensible for any business with a significant sponsored workforce.
Working With a Sponsor License Solicitor
Many businesses find it valuable to work with a sponsor license solicitor on an ongoing basis — not just at the point of the initial licence application, but throughout the life of the licence. An experienced solicitor can carry out mock compliance audits, advise on specific reporting questions as they arise, help you prepare for a compliance visit, and represent you if the Home Office raises concerns.
This kind of ongoing support is particularly useful for organisations that don’t have dedicated in-house immigration expertise, or where HR teams are stretched and SMS management sits alongside a range of other responsibilities. The cost of regular legal support is modest compared to the cost of dealing with a B-rating, a suspension, or worse.
If your business needs a broader review of its immigration position — including settlement planning for sponsored workers or supporting long-serving employees towards indefinite leave to remain — working with a solicitor for british citizenship and immigration specialist who covers the full range of routes means you can handle everything in one place.
Frequently Asked Questions
What happens if I miss a reporting deadline on the SMS?
Missing a reporting deadline is a breach of your sponsor duties. Depending on how serious the breach is and whether there’s a pattern, the Home Office can downgrade your rating to a B, suspend your licence, or in serious cases revoke it. If you realise you’ve missed a deadline, take legal advice promptly on how to handle it — proactive disclosure is generally treated more favourably than a failure discovered during a compliance visit.
Can I appoint a legal representative to manage the SMS on my behalf?
Yes. A legal representative can be added as a Level 1 User on your SMS account and can carry out most SMS functions on your behalf. This is a common arrangement for businesses that want specialist oversight of their compliance obligations without managing everything internally.
Do I need to report if a sponsored worker moves to working from home permanently?
Possibly. If the change means the worker is no longer based at the location recorded in the SMS, that may need to be updated. The specific reporting obligation depends on the nature of the change and the route under which the worker is sponsored. When in doubt, seek advice before assuming a change doesn’t need to be reported.
What is a compliance visit and how should I prepare?
A compliance visit is an inspection carried out by the Home Office, which can be announced or unannounced. Inspectors will typically want to check your HR systems, your right to work records, your SMS records, and whether your sponsored workers are carrying out the roles described in their Certificates of Sponsorship. Preparation involves ensuring all records are accurate, accessible, and up to date before any visit happens — not scrambling to get things in order after one is announced.
How long should I keep records relating to sponsored workers?
You must keep records for the duration of the sponsorship and for a period afterwards. The Home Office’s current sponsor guidance sets out the specific retention periods for different types of documents. As a general rule, keeping records for at least two years after the end of the sponsorship is a sensible baseline, but check the current guidance for the specific requirements that apply to your situation.
What does the Immigration Skills Charge cover and is it linked to compliance?
The Immigration Skills Charge is a levy paid by sponsors when assigning a Certificate of Sponsorship. It is not directly related to SMS compliance — it’s a fee collected by the Home Office to fund skills training in the UK. The current rate is £1,000 per year for medium and large sponsors and £364 per year for small sponsors and charities. Non-payment or errors in payment can affect your application, so it’s worth including it in your pre-CoS assignment checklist.
Talk to Garth Coates Solicitors
Good SMS practice isn’t complicated, but it does require consistent attention and a clear understanding of the rules. If your organisation doesn’t currently have that in place — or if you’re unsure whether your existing processes are good enough — the right time to review them is now, not when a compliance visit is already under way.
Garth Coates Solicitors is a specialist immigration law firm based in Holborn, London. We work with sponsored employers of all sizes — from SMEs managing a handful of sponsored workers to larger organisations with complex compliance requirements. Our team can carry out a compliance audit of your existing arrangements, advise on specific SMS questions, and represent you if the Home Office raises concerns about your licence.
Call us on +44 (0)20 7799 1600, or request a consultation online. We aim to respond within two business hours.
