The Automatic HMRC Check That Is Revoking Sponsor Licences in 2026

Key Takeaways

• The Home Office makes regular checks with HMRC and compares what each sponsored worker was actually paid with the salary declared on their Certificate of Sponsorship.
• Salary discrepancies, including unreported unpaid leave on the Sponsor Management System, can trigger licence revocation without a warning letter or compliance visit.
• Sponsors must report certain changes within 10 working days; missing even one deadline can result in losing the licence.
• 4,714 sponsor licences were revoked in the 12 months to June 2026, more than double the 1,948 revoked in the 12 months before.
• Where a Skilled Worker's Certificate of Sponsorship was assigned on or after 8 April 2026, pay is tested in every pay period as well as over rolling periods, so a shortfall in one month cannot be made up later.
• A robust HR compliance system is no longer optional. It is the only reliable way to protect your sponsor licence.

Introduction

A UK employer recently lost their sponsor licence. Not because they hired someone without permission, and not because they broke any employment law. They lost it because a sponsored worker took unpaid leave, the employer agreed to it, and no one reported it on the Sponsor Management System (SMS).

The Home Office cross-referenced the employee's HMRC payroll record against their Certificate of Sponsorship, found a salary mismatch, and revoked the licence. No warning letter. No compliance visit. No appeal.

This is not a rare edge case. It is increasingly the norm. The Home Office makes regular checks with HMRC to confirm that sponsored workers are being paid what their Certificate of Sponsorship says. If your records do not match, you can lose your licence before you even know there is a problem.

This blog explains exactly what these automated checks involve, what your reporting duties are, and what practical steps you can take to protect your licence. You may also find our related blog helpful: Home Office Salary Checks for Sponsor Licences: What Every UK Employer Must Know in 2026.

What Are HMRC Automated Payroll Checks?

UK Visas and Immigration (UKVI) makes regular checks with HMRC on what sponsored workers are actually paid. This is set out in the Workers and Temporary Workers: Guidance for Sponsors Part 3 (updated 20 May 2026), which states that UKVI will make regular checks with HMRC to ensure sponsors are paying their workers appropriately and in line with the Immigration Rules and sponsor guidance.

What this means in practice is straightforward. UKVI takes the salary figure declared on a worker's Certificate of Sponsorship and compares it to what HMRC shows was actually paid. A mismatch can be identified without the need for a compliance visit or any contact with the employer beforehand.

This is a significant shift. In previous years, salary compliance was primarily checked during physical or digital compliance visits. Now, discrepancies can be picked up from payroll data without a visit. The compliance burden has not increased, but the detection capability has changed completely.

What Triggers a Red Flag?

The most common situations that cause a mismatch between the CoS salary and HMRC payroll data are set out in the sponsor guidance and include the following scenarios.

Unpaid leave exceeding four weeks

If a sponsored worker is absent without pay, or on reduced pay, for more than four weeks in total in a calendar year, you must report it. You must also normally stop sponsoring them, unless the absence is a permitted one such as statutory parental leave, sick leave or jury service. The salary drop recorded by HMRC will otherwise appear as an unexplained reduction against the salary declared on the CoS.

A salary reduction of any kind

Any reduction in a sponsored worker's pay below the level stated on their Certificate of Sponsorship must be reported within 10 working days. This includes reduced hours, contractual changes, or any other reason that lowers earnings below the threshold.

A worker not starting on time

A sponsored worker should normally start within 28 days of the latest of the start date on their CoS, the "valid from" date on their eVisa or entry clearance, and the date they were told their application was granted. If they have not started by then, you must report the new start date and the reason, or stop sponsoring them, no later than 10 working days after the 28 days end. A worker appearing on your payroll later than the CoS start date is exactly the kind of discrepancy the automated system is designed to catch.

Unauthorised absence

If a worker is absent from work without your permission for more than 10 consecutive working days, you must report this to UKVI via the SMS.

Changes to employment terms

Significant changes to the nature or terms of a worker's employment, including changes to job role, normal work location, or core duties, must be reported even where no formal change of employment application is required.

These are not administrative extras. They are legal obligations under the sponsor guidance, and non-compliance is now automatically detectable.

The 10 Working Day Reporting Deadline

One of the most misunderstood aspects of sponsor compliance is the 10 working day reporting deadline. When a reportable change occurs involving a sponsored worker's circumstances, you have 10 working days from the date of that event to report it using the 'Report migrant activity' function in the SMS.

The following changes all carry this 10 working day deadline:

• Unpaid leave or reduced pay exceeding four weeks in any calendar year
• Any reduction in salary below the level stated on the Certificate of Sponsorship
• Unauthorised absence of more than 10 consecutive working days
• Significant changes in job role, employment details, or duties
• A change to the worker's normal work location
• Ceasing to sponsor a worker for any reason
• A worker not starting within 28 days (report no later than 10 working days after the 28 days end)

For guidance on how to use the reporting function, see SMS Manual 9: Reporting Worker Activity.

For changes to your organisation rather than an individual worker, such as a change of address, key personnel, or trading status, the deadline is 20 working days.

There is no grace period and no informal arrangement. The Home Office does not distinguish between an employer who forgot and one who deliberately concealed a change. The duty is strict.

Why Are So Many Licences Being Revoked?

The figures speak for themselves. The Home Office revoked 4,714 sponsor licences in the 12 months to June 2026, more than double the 1,948 revoked in the 12 months before.

Checks against HMRC payroll records mean that breaches which previously went undetected for months can now be found without a visit. The compliance officer no longer needs to visit your office to find a discrepancy.

It is important to be clear on a key point: revocation grounds do not require deliberate wrongdoing. The Home Office guidance states explicitly that grounds for revocation do not necessarily require breaches to be deliberate or made knowingly. An employer who missed a reporting deadline because they did not have a proper system in place is treated the same as one who knowingly concealed a change.

For more context on how the Home Office uses salary data, see our blog on Home Office Salary Checks for Sponsor Licences.

For the full picture of what holding a licence involves, read our guidance on how to apply for a sponsor licence.

What Happens If Your Licence Is Revoked?

Losing a sponsor licence has immediate and serious consequences for your business and for your sponsored workers.

For your organisation, the effects include:

• Your organisation is removed from the public Register of Licensed Sponsors immediately
• All assigned Certificates of Sponsorship become automatically invalid
• Any pending visa applications supported by those CoS are refused
• You cannot apply for a new sponsor licence for at least 12 months from the date of revocation (24 months if you have been revoked more than once)

For your sponsored workers, the impact depends on the circumstances:

• Workers not involved in the reasons for revocation normally have their permission cancelled so that 60 calendar days remain, during which they may find a new sponsor. Workers with 60 days or less left are not normally cancelled, and a temporary arrangement applies to care workers and senior care workers
• Workers considered complicit in any wrongdoing face immediate cancellation of their permission
• Workers who have been granted entry clearance but not yet travelled will have their clearance cancelled

You can check the current status of any sponsor on the Register of Licensed Sponsors. Workers are advised to check this before travelling.

For businesses that rely on skilled overseas workers, this disruption can be significant. Entire recruitment pipelines are halted, current employees face uncertainty, and the reputational impact on the business is real.

The April 2026 Pay Period Rule: A New Layer of Risk

For Certificates of Sponsorship assigned on or after 8 April 2026, a further change made salary compliance significantly more demanding. For full details, see our blog on New Skilled Worker Visa Pay Period Rules 2026.

Pay is now tested in two ways, and both must be met. In each pay period, the worker must be paid at least the going rate for every hour worked in that period, and a shortfall in one month cannot be made up later. Over any three months, or any 12 weeks for workers paid more often than monthly, the worker must also receive the matching share of the required annual salary.

This matters because HMRC payroll data is reported by pay period. A salary shortfall in a single month will appear in the HMRC data, which is then cross-referenced against the CoS. Employers who historically managed salary compliance on an annual basis must now ensure compliance is maintained monthly, or at whatever frequency they pay their staff.

How to Build a Compliance System That Protects You

The employers who lose their licences are rarely those doing something deliberately wrong. They are the ones who did not have a system to catch changes before they became a problem. The solution is a structured, documented compliance process.

Keep your SMS up to date at all times

Use the Sponsor Management System to report changes promptly. Do not assume a change is too minor to report. If you are unsure whether something is reportable, the safest approach is to report it.

Train your HR team on sponsor duties

Everyone involved in managing sponsored workers should understand the 10 working day reporting rule, what triggers a reporting duty, and how to use the SMS. This is not a task for immigration lawyers alone. It is a day-to-day HR function.

Monitor payroll against CoS records every pay period

From April 2026, a monthly payroll review comparing actual pay against the CoS salary for each sponsored worker is essential. Any discrepancy must be addressed and, where required, reported without delay.

Have a clear process for managing leave

Any time a sponsored worker approaches four weeks of unpaid leave in a calendar year, your HR system should flag this for review and initiate the reporting process if the threshold is reached or exceeded.

Maintain records in line with Appendix D

The Appendix D to the sponsor guidance sets out exactly which documents you must hold for each sponsored worker. These must be available on demand during a compliance check.

Conduct regular internal audits

Periodic internal reviews help identify and correct gaps before a Home Office compliance check does. Following the 2026 guidance updates, this is more important than ever.

Visit our HR Compliance page and our blog library for more guidance on sponsor compliance and UK immigration updates, including our blog on Skilled Worker Visa Caseworker Guidance Updated May 2026.

Quick Reference: Key Reporting Duties for Sponsors

How Can WorkPermitCloud Help?

At WorkPermitCloud, we understand that compliance is not just about knowing the rules. It is about having the right system in place to follow them every single day. Our WPC Compliant HRMS App is built specifically for UK sponsors, with automated alerts for reporting deadlines, payroll monitoring tools, and record-keeping features designed to meet Home Office requirements. We also offer a Free HR Compliance Audit Tool and a comprehensive professional UKVI-Compliant HR Audit Service to identify any gaps in your current processes before the Home Office does. Get in touch with our team today.

Conclusion

Regular checks against HMRC payroll data have fundamentally changed what compliance means for UK sponsor licence holders. The Home Office no longer needs to visit your premises or wait for a complaint to identify a breach. If your payroll data does not match your Certificate of Sponsorship, the system will find it.

The rules themselves have not changed. The enforcement has. Sponsors who have always kept thorough records, reported changes on time, and maintained their SMS accurately have nothing new to fear. For those who have been relying on low detection rates rather than genuine compliance, the landscape in 2026 is very different.

We encourage all UK employers holding a sponsor licence to review the Workers and Temporary Workers: Guidance for Sponsors Part 3 (updated 20 May 2026) and to assess their current compliance processes. Visit our HR Compliance page or browse our blog library for further guidance on protecting your sponsor licence.

Reporting is not just administration. It is protection. And with the right system in place, it does not have to be a burden. 

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