Have you merged or
4 March 2020
When a sponsor is granted a Tier 2 licence, significant trust is placed in them by the Home Office.
With this trust comes a direct responsibility to act in accordance with the Immigration Rules and report certain information or events to the authorities, within a set time limit.
The duty of informing the Home Office of a company merger or acquisition (M&A) is unlikely to spring to the mind of every sponsor. However, reporting is mandatory.
What should you report?
The sponsor guidance states sponsors have a duty to inform the Home Office if they are involved in a merger, takeover, de-merger, or have undergone any other similar change.
Examples include where you sell all or part of your business, or the controlling number of shares in your business.
The report to the authorities should be made by your designated sponsor licence level 1 user. Thereafter, the Home Office will ask for documents to verify the change.
Where there is a change in direct ownership of your organisation or business, for example, if it is sold as a going concern or a share sale results in the controlling number of shares being transferred to a new owner, it is likely that your sponsor licence will be either revoked, or made dormant.
If you are completely taken over or merged into another organisation and your sponsored migrants are moving to a new organisation, the reported change via the sponsorship management system (SMS) should include details of all the sponsored migrants who will be moving to a new organisation.
Likewise, if you have completely taken over or merged with another sponsor organisation and their sponsored migrants are moving to you, you must not forget to report the change via SMS, including details of any migrants you have accepted full sponsorship responsibility for, within 20 working days of the change taking place.
Is the Home Office undertaking a purge?
Given there are upwards of 2500+ domestic and cross-border merger & acquisition transactions in the UK each year, it is unlikely that all sponsors are adhering to the requirement to inform the Home Office.
The authorities are aware this ‘reporting tripwire’ exists but do not offer any concessions. During an audit, immigration staff routinely seek out such nonconformity in order to take action against the sponsor.
It is not just a compliance visit that sponsors should fear. We suspect the Home Office is also proactively reviewing M&A activity on Companies House to spotlight those errant sponsors who have failed to report changes to the immigration authorities.
Where non-compliance is identified, the Home Office has a perfect excuse to question specific sponsors on their inability to fulfil precise reporting responsibilities.
If your business has been through a change of ownership since acquiring its sponsor licence, it is therefore prudent to check whether the Home Office was updated at the time, before the authorites check for you!
Adhering to sponsor duties might not be easy but it is essential. Smith Stone Walters is on hand to help. Speak to one of our team today.