The title 'self-sponsorship' was always misleading and it is a term that UK Visas and Immigration (UKVI) are keen to have ceased and desisted.
For a long time, a person could not be sponsored under Tier 2 (General) if they owned more than 10% of a business. With the change to Skilled Worker, this restriction was removed. This meant that those who owned up to 100% of a company could then be eligible for sponsorship by that same company, which then meant that individuals could then incorporate companies that then offered them sponsorship - and why not? As long as they met all the requirements of the Skilled Worker sponsor guidance, including having eligible key personnel, there was no difference between this or being sponsored by a company for which they had no ownership.
I think marketing might have ruined it.
The term 'self-sponsorship' sprung up and UKVI's spider senses started tingling. Since the UK had dramatically closed its Investor and Entrepreneur visa routes and watered down its modern incarnation: the Innovator Founder visa, there was now a route to qualify for a visa leading to settlement for a UK company that met no test of innovation and that had no strict requirements for demonstrating seed capital.
At the same time, UKVI is fighting a battle against companies that exist only to sponsor workers i.e. companies that have been granted sponsor licences because on the surface they are legally established and meet the evidential requirements of the sponsor licence guidance and appear to be genuine, but in fact they are not. They are existing simply as a payroll that sponsored workers are paying into in order to then be paid back this money as a salary.
However, many of these changes will also provide issues for those seeking sponsorship for newly incorporated UK companies, as follows:
UKVI will refuse a sponsor licence application from a company that has no operating or trading presence in the UK. How does UKVI define an 'operating or trading'? As follows:
"Broadly, ‘trading’ can be taken to refer to operations of a commercial kind by which the trader provides to customers for reward some kind of goods or services.
‘Operating’ includes the activities of both:
A sponsor licence application from a UK company that has not yet started actual trading must, therefore, provide evidence that pre-trade activities are well underway.
However, UKVI guidance then presents an example in their guidance that outlines a discretionary refusal ("unlikely to be satisfied") for a lack of "significant trade activity", which increases the threshold for activity to evidence of tax and utility payments - not something a newly incorporated UK company can provide.
UKVI will refuse a sponsor licence application where they have:
"...reasonable grounds to consider or suspect that your organisation has been established, or exists, mainly to facilitate the entry or residence of a person who would not otherwise have permission to work in the UK and do the work in question "
The example then provides an example of a person who has incorporated a UK company from outside the UK and is seeking to enter the UK on a Skilled Worker visa. How important then, will be a person's current status in the UK? Will a Graduate visa holder, or Skilled Worker visa holder who is working for another company be viewed to otherwise have permission to work in the UK and do the work in question?
We have always been very cautious not to promote the idea of 'self-sponsorship' and to instead support business owners of credible UK companies apply for sponsor licences that could then sponsor them. Our key considerations are:
1. Key Personnel
The most misleading part of the title 'self-sponsorship' is that it creates an image of a person sponsoring themselves directly. However, a sponsor licence can only be issued to an organisation that has eligible key personnel: an Authorising Officer who is responsible for managing sponsorship for the organisation who cannot then be a sponsored worker, and a Level 1 User who is a settled worker. These roles can be undertaken by the same person, so it is essential that the company has a settled worker in a senior position who will manage the relationship with UKVI.
If a sponsored worker assigns their own Certificate of Sponsorship, the sponsor licence will be revoked, which is further need for there to be a complete separation in the physical act of sponsorship from the visa applicant and the company.
Your key personnel cannot just be individuals whose names are listed on your application and/or Companies House registration. These licence applications are likely to invite a pre-licence compliance check, so your Authorising Officer needs to be fully involved in the sponsorship process and understand the business as well as the visa applicant.
2. Trading
We have never felt comfortable submitting a sponsor licence for a brand new organisation with a UK bank account showing no evidence of operating and with no other evidence of future work. We have had successful applications from senior consultants starting their own consultancy from scratch, but with an excellent track professional record to speak of and clear evidence of future work in the pipeline.
It might take some time for a company to be able to evidence trading, so we often advise those already on visas that allow them to work or undertake supplementary work to use this time to get the business up and running.
It might also be worth considering joining an existing organisation instead of starting one from scratch. Join a consultancy instead of forming your own as the track record of the organisation that you are joining will make it much clearer to evidence that the organisation can support sponsorship.
If you need further information on how your organisation might be able to offer you sponsorship, please do get in touch by clicking the link below.