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Will Changing From A Sole Trader To A Limited Company Affect My Sponsor Licence Application?

Many businesses up and down the country could benefit from the addition of a Tier 2 Sponsor Licence. The flexible benefits of being able to hire staff from across the globe is a huge positive when your business requires specialised skills that may not be available locally. One question that does come up regularly is whether you can switch from operating as a sole trader to a limited company whilst applying for or holding a Tier 2 Sponsor Licence? Unfortunately, like much of immigration law, the answer is not always straightforward. For this reason we are going to take a deeper look at the options open to those who are currently sole traders with, or who have applied for, a Tier 2 Sponsor Licence and who are looking to turn their businesses into a limited company.

Can Any Type Of Business Hold A Tier 2 Sponsor Licence?

There are some restrictions as to the types of businesses that can apply for a Tier 2 Sponsor Licence. Clearly the business has to be operating in a legal capacity, but there are some other significant hurdles that must be jumped in order for a business to be considered appropriate for a Tier 2 Sponsor Licence. You must of course be operating as a genuine organisation; this is defined as a company structure such as sole traders, corporations or limited-liability partnerships. There must also be no evidence that anybody in your organisation could present a threat to UK immigration control (i.e. not having a history of immigration law breaking) and you will need to nominate at least three staff members to fulfill the roles required by the Home Office in your organisation. You will also need to ensure that your business has the appropriate HR systems in place to cope with dealing Tier 2 General Visa holders and the record keeping that this entails.

As long as you can meet the criteria laid out for the Tier 2 Sponsor Licence, you should have a very good chance of being accepted for one. This though is only half of the story; once you have a Tier 2 Sponsor Licence, you will need to follow the prescribed rules on creating Certificates of Sponsorship (CoS) for would-be employees. These rules include the resident labour market test (to ensure that the role offered could not be fulfilled locally) and ensuring that all documentation has been checked to ensure that the applicant is eligible to work in the UK. There are also several requirements for the roles offered to Tier 2 General Visa holders that must be met to maintain your ability to operate as a Tier 2 Sponsor Licence holder.

So Can I Switch To A Limited Company If I Hold, Or Am Applying For, A Tier 2 Sponsor Licence?

Theoretically you could make this change whenever you wanted to, but in practice, making changes while the application is being processed may cause more problems than it solves. Our suggestion at this point would be that if you are planning on making the change from being a sole trader to a limited company, you may be best doing so after your application has been approved. In most situations the need to convert your business type is rarely urgent. So waiting until your application has been approved may well be the best solution. Of course every case is individual and if you feel that you have a pressing need to change your business type then it may be worth getting in touch with our immigration specialists who can help you to make the decision.

If you do decide to make the change after you have been approved for your Tier 2 Sponsor Licence, you will need to inform the Home Office within 20 days. This may well cause the Home Office to take a second look into your affairs, but if you have maintained the records as required, you should have little to worry about. Changes so early into a Tier 2 Sponsor Licence are rare, and this is what may cause the raised interest from the Home Office. If you are planning in advance to change your company type, you may wish to do this before making your application in the first place. To discuss your options, call today and speak to a member of our team.

Is There A Benefit From An Immigration Standpoint To Being A Limited Company?

Most of the benefits of becoming a limited company are financial. The reduction of risk to your personal finances is a big draw. For certain businesses there will perhaps be tax advantages to being a limited company rather than a sole trader. If you are unsure as to which type is best for your business, you may wish to consult a business consulting service who can help. From an immigration standpoint, there appears to be little benefit in changing to a limited company from a sole trader. Directors of a business will still be held personally responsible should immigration laws be broken and could face significant punishment.

As per most situations, your decision to switch from a sole trader to a limited company should be based on what is best for the business. While immigration will clearly be of some concern, it should probably not be the basis for your decision in switching from being a sole trader to a limited company. If you wish to discuss the benefits or potential downsides of switching from being a sole trader to a limited company as far as immigration is concerned, please get in touch today and our immigration specialists will be able to help you.

Where Can I Get More Help?

If you need help with your Tier 2 Sponsor Licence then please get in touch. Our experienced immigration specialists have a wealth of experience helping businesses just like yours to thrive while maintaining their licence. So please get in touch today and access the wealth of knowledge that we hold to ensure that you stay compliant - you will be glad you did.

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Kind regards
Nancy Jacquard

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