The rise of Home Office compliance visits – how can you prepare?

"In connection with your sponsor licence I would like to complete a compliance visit to your business premises… I will require access to your HR systems and staff files." An unexpected email which will make any Tier 2 sponsor licence holder nervous.

The Home Office places significant trust on sponsors. With this trust comes a responsibility to act in accordance with the Immigration Rules and all parts of the Tiers 2 and 5 Guidance for Sponsors, a 202 page guide. Essentially, the Home Office has outsourced part of their role to monitor immigration compliance to those companies who choose to apply for a sponsor licence and retains an ongoing duty to ensure that all such sponsors discharge their responsibilities. The Home Office will take compliance action when they consider that a sponsor has failed to discharge its duties or otherwise poses a risk to immigration control. The Home Office has the right to conduct on-site visits to any physical address where sponsored Tier 2 migrants are working - such visits can be announced or unannounced.

The number of audit visits continues to increase with businesses in some areas (such as retail or IT) being more at risk than others. During a visit the auditor is checking whether a sponsor is meeting their obligations, has the necessary systems and procedures in place to do so, is sending accurate information to the Home Office, and is complying with their obligations to prevent illegal working. They will review files, interview sponsored staff and Key Personnel (your Authorising Officer, Key Contact and Level One User), and inspect policies.

So what should you know about an audit visit…?

• The chances of receiving a visit, whist increasing, remain low for most sponsors. Based on statistics for Q3 and Q4 of 2017, 14% of applicants for a licence received a pre-licence visit. There was also an 8% risk of a visit for Tier 2 sponsors after the licence has been issued.
• However of those who received a post-licence visit during this period, 71% resulted in suspension or revocation of their licence. This means that if you are selected for a visit, the chances of you having compliance action taken against you are high and should be taken very seriously.
• Many visits are scheduled following receipt of intelligence from HMRC that someone is working illegally. For example, a red flag may be raised because they are paying tax but have not evidenced that they have a valid visa or they are working more hours than are permitted for their visa type (a common issue for those employing Tier 4 students). If you receive a civil penalty or enquiry from the Home Office illegal working team you are more likely to receive a follow up audit visit.
• The auditor is are required to review at least 10% of sponsored migrant files, 40% of right to work check documents and interview at least 3 sponsored migrants. This means that the visit lasts for quite a long time and requires significant preparation in advance. Based on recent experience the auditor will often ask to review all sponsored migrant files and take copies of all right to work documents, especially in a small company.
• In the event that the visit does not go well, your sponsor licence may be downgraded to a B rating or revoked. Either outcome will have serious implications for the company.
  
  If you are given a B rating you are required to pay for a three month action plan at a cost of £1,476. During this period you are not allowed to sponsor any new staff or make any changes to your licence (which can cause real issues in a company with a very mobile workforce). You will then be subject to a second compliance visit to check whether you have complied with the requirements of the plan.
  
  If your licence is revoked, whether straightaway or following your non-compliance with an action plan, those employees who hold Tier 2 visas will have their visas curtailed. They will normally have 60 days to find another sponsor or they, and any dependent family members in the UK, will need to leave the UK and will often be subject to a 12 month cooling off period during which time they cannot come back to the UK.
  
  It is possible to submit representations to challenge a decision to revoke your licence. This can be a lengthy and expensive process. Unless you are able to satisfactorily address and overturn each of the auditor's concerns (which is not normally easy to do), your licence will not be reinstated.
  
  

What should you do if you receive this seemingly innocuous email?

• Request to postpone the meeting – if the visit is announced the auditor normally allows you to postpone the meeting to a more convenient time. This can buy you some valuable time to ensure that your systems and personnel are ready. A postponement of one to two weeks will be the maximum permitted.
• Review your files – your Level One User and HR team should undertake regular reviews of your sponsored workers files to ensure that they are compliant with the Appendix D record keeping requirements, all information is up-to-date, and any changes in personal circumstances have been reported in accordance with Home Office rules. A pattern of late or non-reporting can be enough to lead to your licence being revoked as it suggests that you are not aware of your sponsor duties. If you find any discrepancies in your files then speak to us to decide what reports should be made and how these should be addressed. Generally, late reporting is still better than no reporting.
• Consider arranging a mock audit – it can prove helpful to ask us to come to your offices before the audit to review your files and to check they are compliant with the sponsor guidance. We can work with you to spot any potential issues, ensure any necessary notifications are made, and conduct a mock-interview with your Key Personnel to prepare them for the visit based on our experience in this area.
• Review your right to work documentation – all employees, regardless of their nationality, must have their right to work documentation checked, copied and retained before they start work. This normally consists of checking their original passport and any visa documentation if applicable. Copies must be signed and dated (to show that they were completed before work started) and include prescribed wording. This verification process is important as if done properly it can provide a defence (known as a statutory excuse) against any allegations of illegal working (which can lead to £20,000 fines or imprisonment). If you find any gaps in your documentation we would recommend taking fresh right to work copies to sit alongside the original checks and reviewing your right to work processes.
• Prepare your Key Personnel and sponsored staff – the auditor will interview your Authorising Officer (AO). This interview generally takes around two hours.
  
  They may also ask to speak to your Level One User and three to ten of your Tier 2 sponsored staff. They will be checking that your AO understands the licence and duties which apply to them. They will want to ensure that roles filled by sponsored staff are suitably skilled, that any advertising carried out pre-sponsorship is genuine and meets the strict Home Office rules, that you are paying staff in accordance with their visas.
  
  They will also ask questions about general legal compliance including your understanding of employment law, for example holidays and hours worked. Your AO, who under the rules must be a senior member of staff, may not be up-to-date with all Home Office rules. They will need to take time to carefully review the guidance and other helpful documents such as our pre-licence audit visit guidance.
  
  Whilst lawyers can normally sit in on visits, the role we play is a limited one. We cannot for example answer questions on your behalf. This means that time must be taken to prepare your AO and staff for the interviews. Care must be taken as to where the visit should be conducted. For example how will you demonstrate access to files, especially if you use online files? Do you have a meeting room that you can use away from your office employees? Do your reception staff know of the visit?
  
  

As will be clear from the above, an audit visit can be time consuming and stressful and the potential outcome of not preparing fully can be a real issue for international companies. We recommend that sponsors ensure their files remain up-to-date at all times and take sponsor licence compliance seriously. It is much easier to prepare for an audit if your files are already in good condition.

If you have any questions about this article please speak to Vikki Wiberg, Senior Counsel in the Mobility Group, or your usual immigration contact.