The new Joint and Several Liability (JSL) rules were introduced on 6th April 2026 and have fundamentally changed how HMRC enforces PAYE compliance. JSL has now placed far more risk onto recruitment agencies.
The reforms were designed to make tax compliance less about who runs payroll and more about who controls the supply chain. This means that where an umbrella company has failed to pay PAYE tax or contributions, HMRC can pursue the full amount from the agency itself, even if they did not make the error.
For further guidance, you can refer to HMRC’s official update on Joint and Several Liability.
What Are the Risks?
As a recruiter, you already have a good idea of the risks you now face – but it’s worth going over them before we get to the solutions.
Sitting on the front line of umbrella selection and contractor engagement, the risk for your agency is both commercial and regulatory. Placing contractors with umbrella companies without fully assessing their credentials and compliance records can create real exposure for the agency.
This means that you now play a key role in protecting both the business and the worker.
Financial Risk
If PAYE isn’t handled correctly, agencies could face major liabilities, which include unpaid tax, NICs, interest, and penalties. Even minor errors can suddenly escalate into six- or seven-figure liabilities, especially if there are any past payroll issues that resurface.
Legal & Governance Exposure
Weak oversight can lead to regulatory action, audits, and even legal disputes. It may also bring scrutiny from insurers and lenders, increasing the pressure on your business.
Erosion of Client Trust
Clients expect clear and compliant supply chains – any perceived risk can quickly damage trust and potentially cost agencies future business.
Commercial Disruption
Non-compliance can disrupt contracts, workers, and operations. In larger agencies, it can quickly escalate into a serious leadership issue.
Protecting Your Agency
The good news is that getting this right doesn’t have to be complicated. In fact, a strong approach can be spread quite simply across three pillars.
Pillar 1: The Right Partners
A compliant business carefully selects its umbrella partners, prioritising independently accredited providers and seeking real-time compliance assurance. This includes looking for recognised industry standards such as SafeRec certifications and FCSA accreditations, which provide additional oversight of payroll accuracy as well as operational compliance. Providers who can’t demonstrate good practice are removed quickly – which makes this your first and foremost line of defence.
Pillar 2: The Right Process
Your compliance needs to be visible, structured, and auditable. This includes documented onboarding checks, securely held evidence, clear escalation paths, team training, and clearly defined ownership of supply chain risk. If something isn’t documented and repeatable, it won’t stand up as governance in the eyes of HMRC.
Pillar 3: The Right Evidence
Both HMRC and clients expect clear proof taxes are being calculated correctly, submissions match payslips, and liabilities are paid in full. Ongoing monitoring, not just one-off audits, is essential. This makes third-party verification, including independently audited payroll processes, a valuable layer of assurance.
With your recruitment agency standing on these pillars, you are in a much stronger place when HMRC comes knocking.
For more details and an action-ready checklist, check out our white paper.
How Can Omnia Help You?
Omnia’s approach keeps it simple: Make compliance transparent and verifiable, so you don’t carry any unnecessary risks.
As an established umbrella provider that supports a high volume of contractors across multiple sectors, Omnia operates at scale, with experienced payroll, compliance and operational teams that understand the realities of agency supply chains.
That scale means we’ve carved out a robust payroll process that is consistent across contractor populations with high levels of oversight and control internally, supported by recognised compliance frameworks and independent verification.
Under JSL, who you choose matters more than ever. Omnia is built around transparency – we give agencies clear and verifiable evidence that PAYE obligations are being met in full.
Ensure your current umbrella arrangements stand up to HMRC scrutiny by booking a call with us today.