Sponsor Licence: Starting up as a Start-up

This is the first of three articles in our series on sponsor licences. This article focuses on how to obtain a sponsor licence as a Start-up business.

In the eyes of the Home Office, a Start-up is a company that has been operating or trading in the UK for less than 18 months on the date that they make a sponsor licence application. Typically, this will be a smaller company that is in its infancy but it might also be an organisation that is simply doing the groundwork for an idea that they intend on implementing once investment is sourced. 

The process for applying for a sponsor licence as a Start-up is, as you might expect, different compared to the process in place for more established companies that can demonstrate a consistent trading pattern. 

What documents need submitting?

The Home Office are willing to accept that Start-ups aren’t necessarily going to be able to disclose to them the usual suite of documents required as part of the sponsor licence application, it being unlikely that a company with a short trading period will have documents such as audited account, commercial leases, and the like. There is, therefore, some flexibility in what can be provided in place of these. 

At the very least, Start-ups will need to evidence that they have a corporate bank account that is registered by the Financial Conduct Authority (the “FCA”) and the Prudential Regulation Authority (the “PRA”). This must be a current account. Whilst most financial service providers in the UK are registered with both the FCA and PRA, Start-ups founded from overseas investment can sometimes fall foul of this requirement.

The Home Office will also expect to see an employer’s liability insurance certificate (which must show cover for at least £5 million and be issued by an FCA authorised insurer), a VAT certificate, and evidence that they have registered with HMRC as an employer for the purposes of paying PAYE and making National Insurance contributions. 

Start-ups are also encouraged to send as many documents of the below as they may have:

  • proof of listing on the London Stock Exchange AIM market
  • proof of listing on one of the FCA approved international stock exchanges
  • proof of registration with HMRC as self-employed 
  • current financial report and/or audited annual report with the name of the accountant shown
  • latest acknowledgment of a tax return CT620 or the completed CT600 along with CT603
  • evidence of submitting return to HMRC – Foreign Entertainers Unit
  • evidence of appropriate planning permission to operate their business at the trading address
  • proof of listing as an overseas company on the London Stock Exchange International Companies listing
  • latest audited annual accounts with the accountant clearly shown 
  • latest annual self-assessment tax return to HMRC 
  • a letter from a corporate bank setting out the dealings they have had with the start-up, the nature of the dealings and the duration of the dealings
  • proof of ownership or lease of commercial premises
  • licence for premises to serve alcohol issued by the local authority or court

Whilst not mandatory, documents such as incorporation certificates, hierarchy/org charts, and an overview of business plans can also be helpful to provide.

What other information will be required?

As with all sponsor licence applications, Start-ups will be expected to provide details about their operations (e.g., what sector they operate in, how many employees they currently have, which locations they are in) and what type of roles they wish to sponsor in the future. 

An Authorising Officer, who will be responsible for the sponsor licence and complying with the sponsorship duties, will also need to be appointed. Importantly, the Authorising Officer must be somebody who is based permanently in the UK, is a member of staff or officeholder, and does not have any unspent criminal convictions for an immigration offence. A Level 1 user will also need to be appointed to manage the licence on a day-to-day basis.

In the case of Start-ups this can sometimes prove challenging as they often only have a handful of UK-based employees to choose from. Whilst it is possible for a company to appoint a Non-Executive Director as an Authorising Officer, they are not permitted to act as Level 1 users. It is not uncommon for Start-ups to specifically employ somebody to fulfil this role.

Anything else?

Where a Start-up is seeking to operate in a sector that is regulated or monitored by a specific body (e.g., healthcare, financial services, medical providers) then they may have to supply additional supporting evidence to show how they meet the regulatory requirements. This could include memberships, registrations, licences, and appropriate qualifications. 

Start-ups are always encouraged to seek independent legal advice before applying for a sponsor licence and navigating the complexities of UK Immigration System to ensure they give themselves the best chance of success.

Next in our sponsor licence series we’ll be looking at the effect a merger or acquisition has on the sponsor licence.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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