In this paper, three-phase four-leg (3P-4L) smart voltage source inverters (SVSI) are used in Multi-Microgrid (MMG) system to improve unbalance compensation functionality employing the Internet of Things (IoT) platform. The SVSls are used with photovoltaic (PV) systems and are designed to control active, reactive and neutral currents at the point of common coupling (PCC) using proportional-integral (PI) current controllers. Generally, a fixed capacity from the SVSI is allocated for the unbalance compensation, and in case of higher compensation requirements, the total capacity of the SVSI needs to be increased. Therefore, an improved active unbalance compensation method is proposed, which utilises any remaining capacity of the SVSI after active and reactive power operations to achieve better unbalance compensation at the PCC. The SVSI performance is analyzed in the PSCAD/EMTDC software environment with a solar PV system and real commercial building loads. In order to extend the functionality of the proposed system for multiple buildings in coordination, the proposed system is mapped to a hierarchical communication architecture where SVSls exchange data over a local and cloud network. The performance of the proposed system is compared with the traditionally used fixed capacity unbalance compensation methods, and the results show that the proposed system provides better neutral current compensation and phase balancing without increasing the SVSI total capacity.