We report on a recent judgment, which is a timely reminder for sponsor licence holders of the importance of meeting their reporting and compliance duties.
The High Court recently delivered judgment in R (Moon Fish Ltd) v Secretary of State for the Home Department [2026] EWHC 2289 (Admin), which concerned revocation of a sponsor licence where the sponsor had failed to report a discrepancy in salary where an employee had a period of unpaid compassionate leave. Although the High Court found in favour of the company and reduced the Home Office decision to revoke the licence, the decision does not reduce sponsors' reporting duties and obligations.
What happened?
Moon Fish sponsored three migrant workers. Following an HMRC data check, UK Visas and Immigration wrote to the company indicating that it was investigating concerns that the sponsored workers may not be receiving the salary stated on the certificates of sponsorship. The company provided the salary records requested without any comment and the records showed that one of the workers had received £3650.51 less that the stated salary which was due to a period of authorised unpaid compassionate leave between April and June 2025.
UKVI, without seeking an explanation for the discrepancy, revoked the licence with immediate effect, relying upon the salary discrepancy (and the failure to report it, which was accepted by the company) as a mandatory ground for revocation.
What the Court decided
The High Court quashed the decision of the Home Office but not as a result of finding that the company were without fault.
Firstly, the company had responded to Home Office in good faith. They were not alerted to the concerns regarding their sponsorship management and as such, were denied the opportunity to address the concerns. The Court found that the decision was procedurally unfair and that a sponsor should be told of the gist of the specific case against it and be given reasonable opportunity to respond before revocation, even if UKVI consider that the alleged breach is a mandatory ground for revocation. The Court held that fair process required that the company should have been afforded the opportunity to address the discrepancy before revocation was implemented.
Secondly, the court rejected UKVI’S argument that any unreported lower salary payment to that stated in the certificate of sponsorship automatically amounted to an unreported salary change which would thus fall within the mandatory revocation grounds. The court distinguished between a reduced payment resulting from a genuine and authorised period of unpaid leave to that of a change in salary to that stated in the certificate of sponsorship. All circumstances required consideration and for Moon Fish, the lawful unpaid leave did not amount to a change in salary because the employee received less pay during the relevant period.
Although the company had failed to report the period of unpaid leave, which was a breach of the sponsorship duties, the Court considered that this should not in itself result in the mandatory revocation of the licence.
A word of caution
Sponsors should not take this as a sign that the failure to report will not be taken seriously nor that the court will be forgiving to incidents of non-reporting. The key distinction made by the court here was that the mandatory revocation ground had been applied incorrectly. The reduced salary payment resulted from a period of lawful unpaid leave and did not amount to an unreported change in salary as argued by UKVI.
The judgment is a reminder of the wider implications for sponsor licence holders. Compliance is at the heart of the sponsor management regime and continues throughout the period of the sponsored workers employment.
All HR decisions affecting the sponsored employee from payroll to absences must be reported through the sponsor management system to avoid any licence suspension or revocation. Sponsors continue to have standing duties to:
Keep accurate records of absence, pay, working hours or change in employee duties
Ensure that any changes are reported through the sponsor management system within the 10 working days.
Ensure that all HR teams are aware of the requirements for sponsored employees, especially for periods of absence
Regularly review records to ensure that details are up to date.
Treat every enquiry from UKVI seriously and always take legal advice before responding.
How we can help
If you need support or guidance with obtaining a sponsor licence or meeting your reporting and compliance obligations, contact our business immigration solicitors.
