Scale-Up Sponsor Licence

What is a Scale Up Sponsor Licence?

The UK Home Office issues a particular kind of sponsorship licence known as a scale-up sponsor licence. It is created to support the expansion of firms with great potential for innovation and growth. The Scale-up method offers both a “sponsored application” route and a “unsponsored application,” in contrast to the Skilled Worker approach.

An organisation is considered Scale-up if it has seen annualised growth of at least 20% over the previous three years, which can be calculated using either employment (staff count) or turnover.

Additionally, at the beginning of this three-year term, it had to employ a minimum of 10 people. The Home Office conducts an assessment by obtaining and validating the company’s PAYE information and/or VAT returns filed to HMRC to ascertain if a company complies with this definition.

Documents Required for a Scale-up Sponsor Licence Application

To obtain a Scale-Up Sponsor Licence, you’ll need to submit a comprehensive set of documents to the Home Office. These documents are set out in Appendix A of the immigration rules. The documents needed are:

• Certificate of Incorporation: This proves your company’s legal status.
• Business Plan: A detailed plan outlining your business’s growth strategy.
• Ownership and Control Documents: These demonstrate the ownership structure of your business.
• HR Systems and Processes: Evidence of your HR systems and processes for recruiting and managing sponsored workers.
• Financial Documents: This includes bank statements, financial statements, and evidence of sufficient funds to meet sponsorship obligations.
• Job Descriptions: Detailed descriptions of the roles you intend to fill with sponsored workers. Advertising History: Records of your efforts to recruit within the UK labour market.

For sponsor licence applicants, the specific documents required can vary based on the type of licence they are applying for and the industry they operate in. These document requirements are outlined in detail in Appendix A.

However, if a company is applying for a Scale-Up sponsor licence, there is generally no need to submit any documents unless the business is legally obligated to be registered with, inspected by, or monitored by a regulatory body in the UK. In such cases, the applicant must provide the evidence or information specified for these regulatory organisations as detailed in table 2.

In essence, the Home Office only requests documentation related to the business if it falls under regulatory oversight. Otherwise, no additional documentation is necessary.

However, if the business is simultaneously applying for a different type of licence, documentation specific to that particular route will be required as well.

Other Requirements For The Scale-up Sponsor Licence Application

• Your company must be a legitimately registered entity in the UK.
• Compliance History: It’s critical to demonstrate compliance with immigration regulations and sponsor obligations.
• Genuine Business: You must demonstrate that your company is legitimately running and not engaging in any illicit activity.
• Resident Labour Market Test: Prior to sponsoring foreign workers, you might need to show that you’ve made an effort to fill positions in the local labour market.

What Is the ‘Endorsing Body’ Pathway?

The endorsing body pathway provides an alternative route for prospective Scale-Up employers who may not meet the standard sponsor licence eligibility requirements. This pathway is particularly beneficial for businesses whose HMRC records do not cover a sufficient period to meet the standard criteria.

Endorsement Process

Prospective sponsors can obtain endorsement from an endorsing body approved by the Home Office. This endorsement can then be submitted along with their sponsor licence application, which must be made within three months from the date of endorsement.

Only organisations authorised by the Home Office to act as endorsing bodies can provide the required endorsement. As listed on the Home Office website, these organisations include:

• Envestors Limited UK
• Endorsing Services
• Innovator International
• The Global Entrepreneurs Programme (GEP)

Qualification Criteria for Scale-Up Endorsement

To qualify for a Scale-Up endorsement, businesses must meet the following criteria:

• Have an HMRC footprint covering no more than four years.
• Be solvent and actively trading in the UK.
• Be registered for VAT.
• Maintain a UK-registered corporate bank account.
• Employ a minimum of 10 individuals who pay taxes and National Insurance contributions through a PAYE scheme operated by the business.
• Demonstrate a potential growth rate that aligns with the requirements of the Scale-Up route and have a reasonable expectation of meeting the definition of a qualifying Scale-Up sponsor under the standard pathway within four years.
• Possess sufficient financial resources to offer competitive salaries to employees in roles meeting the skill-level criteria of the Scale-Up route.

Additionally, businesses must meet a minimum of three out of the following five criteria:

• Growth: Demonstrate more than 20% growth in either turnover or employment per year over a two-year period.
• Participation in Relevant Government Programs and Funding: Have participated in a recognized Scale-Up program, received a recognized loan or grant, or participated in the small business research initiative.
• Finance: Have raised at least £1 million in equity finance within a single round in the 12-month period immediately before applying to the endorsing body.
• International Presence: Maintain global offices and/or operations and generate at least 10% of turnover from exports.
• Research and Development Expenditure: Allocate 10% of overall operating costs each year for three years to research and development or allocate 15% in one of the last three years.

Meeting these criteria allows businesses to pursue the Scale-Up endorsement pathway, providing an alternative avenue to secure a sponsor licence for accessing international talent and contributing to their growth journey.

How to apply for a Scale-Up Sponsor Licence

To apply for a Scale-Up sponsor licence, you must complete an online application form and pay the applicable fee to UK Visas and Immigration (UKVI), a division of the Home Office responsible for the UK’s visa system. The Scale-Up route falls under the ‘Temporary Worker’ category for sponsor licensing purposes, and the fees associated with this route are as follows:

• Sponsor Licence Application Fee: £536
• Assignment Fee – Certificate of Sponsorship (CoS): £25 per worker

Notably, if you’re applying under the endorsing body pathway, you may also have to pay an additional fee to the endorsing body. However, there is no Immigration Skills Charge associated with this route.

The application process begins with online registration, where you provide UKVI with your name and email address. After registration, you will receive a user ID and a separate email containing your password, which you’ll use to access the licence application system.

While applying for a Scale-Up sponsor licence, you typically won’t need to submit physical documents. However, you must provide specific information when completing the online form, including:

• Companies House reference number (if applicable, for registered businesses)
• Unique Taxpayer Reference (UTR) number
• VAT registration number
• All relevant PAYE reference numbers through which your business pays its employees.

The inclusion of all PAYE reference numbers, even for settled or unsponsored workers, is crucial for the assessments of employment growth and turnover growth. These assessments confirm that your business had a minimum of 10 employees at the start of the three-year assessment period and whether there has been a minimum 20% increase in employment during this period. Failure to provide all relevant PAYE reference numbers may result in delays or even a refusal of your application.

If your business is subject to mandatory registration or inspection by a regulatory body to operate legally in the UK (e.g., Care Quality Commission for nursing or care homes or Financial Conduct Authority for financial businesses), you must confirm its registration status. UKVI can typically verify this information online, but in some cases, you may need to provide evidence of registration and inspection.

If your UK-based business already holds a valid licence to sponsor workers, you can apply to add the Scale-Up route to that licence. If you’re applying for licensing on another route simultaneously, you’ll need to submit documents relevant to that specific route alongside your application.

How Long Does the Scale Up Sponsor Licence Last?

Applicants for scale-up visas must submit a sponsored application first. They will require sponsorship for a minimum of six months. After six months, the migrants can still work for their employer, but they are no longer considered “sponsored” by the company.

For the first six months of the migrant’s permit, the business is still responsible for the migrant (barring a termination of sponsorship by the enterprise).

What happens after 6 months?

A sponsored scale-up worker who successfully obtains a visa through the Scale-Up route initially receives permission to work in the UK for a duration of 2 years. However, there’s an important distinction to note: the sponsoring employer is responsible for sponsoring the worker for only the first 6 months of this 2-year permission period.

Once these initial 6 months have passed, the original employer is no longer required to sponsor the worker, even if they choose to continue employing them. At this stage, the worker can continue working for the same employer without the need for renewed sponsorship.

Additionally, they have the flexibility to explore job opportunities with different employers, all without the requirement for fresh sponsorship, as long as they still meet the relevant criteria of the Scale-Up route.

For the original sponsor, who likely invested considerable time and resources into obtaining the Scale-Up sponsor licence for recruiting a migrant worker from overseas, this transition can be financially challenging. Therefore, it is often in the sponsoring employer’s best interest to provide incentives for the worker to stay on with the company. This aspect represents a notable downside for sponsors when it comes to hiring scale-up workers.

On the positive side, if the worker chooses to continue working for their original employer, the employer is relieved of any further sponsorship responsibilities moving forward.

Consequently, the employer’s reporting duties, such as notifying UK Visas and Immigration (UKVI) about unauthorised worker absences or significant changes in roles, salaries, or the business itself, are primarily applicable during the initial 6-month period.

What happens after 2 Years?

Upon the expiration of their 2-year visa obtained through the Scale-Up route, migrant workers have the option to apply for an unsponsored visa extension. If approved, this extension allows them to stay under this route for an additional 3 years. Importantly, there is no set limit on the number of times they can seek extensions.

After accumulating 5 years of continuous lawful residence in the UK under the Scale-Up route, either independently or in conjunction with other eligible routes, the overseas worker becomes eligible to apply for settlement in the UK. This settlement is commonly referred to as “indefinite leave to remain,” signifying a permanent and long-term status in the country.

Sponsor Licence Compliance Duties

Obtaining a sponsor licence from the Home Office is contingent on businesses proving their reliability, organisational prowess, and their ability to manage the responsibilities that come with holding such a licence.

Unfortunately, many applications face rejection because companies fail to sufficiently demonstrate in their sponsor licence applications that they comprehend the full scope of duties and obligations associated with sponsorship and how they intend to effectively manage them.

Before initiating the sponsor licence application process, it is imperative for businesses to have a comprehensive understanding of the duties and responsibilities entailed in sponsorship.

While Appendix A of the regulations does not strictly mandate the provision of evidence regarding compliance with these duties, it is prudent, especially when applying for a Scale-Up sponsor licence, to include such evidence demonstrating a proactive approach to compliance with sponsor duties. This not only enhances the chances of a successful application but also sets a strong foundation for effective management of sponsor responsibilities, ensuring a smooth and trouble-free sponsorship process.

In essence, a proactive approach not only secures the licence but also ensures the business is well-prepared for the obligations that come with it.

Once you obtain a Scale-Up Sponsor Licence, you must still adhere to several compliance duties, including:

• Record-Keeping: Maintain accurate records of sponsored workers and their activities.
• Reporting Duties: Report any changes in circumstances or breaches of immigration rules.
• Compliance with Immigration Rules: Ensure that sponsored workers comply with immigration rules.
• Cooperating with Compliance Visits: Cooperate fully with compliance visits from the Home Office.
• Monitoring and Training: Regularly monitor sponsored workers and provide necessary training on compliance matters.

How IAS Can Help

At Immigration Advisory Service, we understand the complexities and challenges that come with obtaining a Scale-Up Sponsor Licence. Our team of experienced immigration experts is here to provide comprehensive assistance to streamline your application process and ensure your success.

For personalised assistance with your Scale-Up Sponsor Licence application, contact IAS today. Our experts are here to help you achieve your business goals while navigating the complexities of the UK immigration system. Call us now at +44 (0)333 414 9244 to schedule a consultation and take the first step toward success.