In addition to reversing the expanded right to work checking obligation for sponsors, changes to the sponsor guidance emphasise that sponsors must be substantively trading or operating in the UK rather than being set up to facilitate the grant of immigration permission.  

The sponsor guidance was updated on 20 May 2026 and contains the clarifications and changes outlined below. 

Reversal of the expanded right to work check duty for sponsors

The guidance contains clarifications and drafting improvements relating to a sponsor's duty to carry out right to work checks. These reverse the expansion of this duty that occurred from 8 April 2026. Read more about this change in our separate article here.

A stricter concept of what counts as 'operating or trading' in the UK

The sponsor guidance glossary contains a new, developed explanation of 'operating or trading' which, while not defined in law, is given a plain meaning for sponsorship purposes.

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:

• charities and other not-for-profit organisations where they are providing a service to clients, customers or service users
• businesses who are engaged in pre-trade activities with a view to commencing commercial trading activity (as defined above) in the foreseeable future

If a sponsor has no operating or trading presence in the UK, the Home Office will refuse a new licence application or revoke an existing licence. The guidance now points to examples where the Home Office is unlikely to be satisfied that an organisation is genuinely operating or trading.

(NB: This article does not cover the specific definitions of 'actively trading' and 'UK footprint' in the context of the UK Expansion Worker route).

New examples of businesses without an operating or trading presence

Part 1 of the sponsor guidance sets out two examples where the Home Office is likely to consider there's no UK operating or trading presence. Both of these target thinly substantiated self-sponsorship. The examples aren't exhaustive, signalling the Home Office's ability to scrutinise various types of arrangement. 

Example 1: no significant trade activity

This example is targeting businesses that exist on paper.

You apply for a sponsor licence. Excluding payments made to HMRC and utility, leasing, insurance and other related bills, there is no evidence of financial transactions taking place between your organisation and any customers, clients or service users. All or most of the finance your organisation is receiving is being supplied directly by a related company or private investors, rather than through trading activity. In this scenario, we are unlikely to be satisfied that you are actively trading as a business for the purpose of holding a sponsor licence.

Example 2: trading with related entities ('circular trading')

This example is looking at who a business is trading with.

You apply for a sponsor licence. Although you have provided invoices and contracts for services, these are wholly or mainly between entities linked to you by common ownership or control, or which share common personnel involved in the day-to-day running of the relevant entities. There is little or no evidence of providing any services to customers, clients or users outside of your organisation (or those entities). In this scenario, we are unlikely to be satisfied that your business is engaging in meaningful operating or trading activity and is instead engaged in a system of 'circular trading' to move money through linked businesses for the purpose of acquiring a sponsor licence.

New ground to refuse a licence application or revoke an existing one

The guidance introduces a new ground in both the licence application and compliance sections to deal specifically with the issue of self-sponsorship. The Home Office may refuse or revoke a licence where it has reasonable grounds to suspect an 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 or do the work in question'.

The guidance gives the below specific self‑sponsorship example that would be likely to result in licence refusal or revocation:

• A person without UK immigration permission registers a company at Companies House while living overseas.
• The company employs a UK‑based worker and appoints them as a Level 1 User on the Sponsor Management System to apply for a Skilled Worker licence and assign a CoS to the person overseas.
• The Home Office considers it unlikely that the company would exist but for the person overseas, who set up the company, who wishes to enter the UK.

These changes underline the Home Office's intention to clamp down on thinly‑substantiated self‑sponsorship arrangements. Sponsors should expect closer scrutiny of their underlying business activities and governance, particularly where a person's immigration position is closely tied to the organisation's existence. 

Need more help?

If you need advice about how the new guidance applies in the context of your business, please contact the Immigration Team.