What “Reasonable Steps” Actually Means Under JSL
Joint and Several Liability (JSL) has made supply chain due diligence more important than ever for recruitment agencies. One phrase you’ll see time and again is “reasonable steps”, but it’s not always clear what that means in practice. In this guide, we explain what HMRC expects, the practical steps your agency can take to strengthen its due diligence process, and how tools such as FCSA accreditation and SafeRec can help you build a more resilient supply chain.
Joint and Several Liability (JSL) has changed the way recruitment agencies need to think about supply chain compliance.
If an umbrella company in your labour supply chain fails to meet its tax obligations, HMRC may look beyond the umbrella company itself when it comes to recovering unpaid liabilities.
That’s why you’ve probably heard the phrase “reasonable steps” more than a few times.
…But what does it actually mean?
To put it simply, it’s about being able to show you’ve carried out appropriate due diligence before working with a supplier and that you’ve continued reviewing them over time.
HMRC expects agencies to have appropriate processes in place to assess and monitor the umbrella companies they work with. That means due diligence isn’t just something you carry out when appointing a new provider but an ongoing part of how you manage your supply chain.
It’s More Than a One-Off Check
A fairly common misconception is that due diligence is something you do once, file away, and forget about. The reality is, your supply chain is constantly changing. Legislation evolves, providers update their processes, and new risks emerge. That means taking reasonable steps means making supplier reviews an ongoing part of your compliance process rather than a one-off exercise.
Know Who You’re Working With
Before partnering with an umbrella company, make sure you understand exactly who they are and how they operate.
Ask yourself:
- Who is actually employing our contractors?
- How are contractors being paid?
- When did we last review this provider?
- Do we know who to contact if something changes?
If you’re reviewing a new supplier, our Umbrella Company Guide explains some of the wider factors worth considering before making a decision.
Ask for Evidence, Not Just Reassurance
It’s easy for a provider to say they’re compliant, but the important question is whether they can demonstrate it.
Ask for evidence that supports their processes, such as:
- Independent accreditations
- Payroll monitoring processes
- Insurance documentation
- Employment contracts
- Compliance policies
The more transparent a provider is, the easier it gets to build confidence in your relationship.
Look Beyond Accreditations
Independent accreditation is an important part of supplier due diligence, but it shouldn’t be your only consideration.
For example, FCSA accreditation demonstrates that a provider has been independently assessed against recognised standards covering areas such as tax, employment and operational compliance.
Accreditation, however, only provides a snapshot.
That’s why many agencies also look for ongoing monitoring. SafeRec, for example, provides real-time payroll verification, helping agencies gain greater visibility into payroll compliance between audits.
The strongest compliance frameworks combine independent accreditation, ongoing monitoring and regular supplier reviews.
Always Keep Records
If HMRC ever asks what reasonable steps you’ve taken, being able to show evidence of your decisions is just as important as making them.
Be sure to keep records of:
- Supplier reviews
- Compliance conversations
- Accreditation status
- Policies and supporting documents
- Decisions and review dates
Good record keeping creates a clear audit trail and strongly shows that compliance has been taken seriously.
Review Providers Regularly
Choosing a supplier isn’t the end of the process. You’ve also got to set time aside to review providers on a regular basis.
Things to check:
- Has anything changed?
- Are accreditations still current?
- Have there been any regulatory updates?
- Have providers introduced new compliance measures?
Build those regular reviews into your processes to help identify potential issues before they become bigger problems.
Don’t Wait for a Problem to Develop
One of the biggest mistakes agencies make is only reviewing suppliers when something goes wrong.
By then, your options may already be limited.
Building a structured review process into your business makes it so much easier to spot risks early and demonstrate that you’ve taken reasonable steps to manage them.
Final Thoughts
There’s really no single checklist that defines what ‘reasonable steps’ look like as every agency’s supply chain is different.
What matters is that you have a clear, documented process for assessing suppliers, asking the right questions, reviewing providers regularly and keeping evidence of the decisions you’ve made.
At the end of the day, reasonable steps aren’t about achieving perfect compliance but showing that you’ve taken a sensible, proactive approach to managing risk.
For a more detailed look at JSL, check out our whitepaper, where we take you through everything that’s changed, who’s exposed and practical ways to reduce the risks.
At Omnia, we help recruitment agencies build stronger, more transparent compliance processes.
Whether you’re reviewing existing suppliers or strengthening your due diligence framework, we’re here to help.
Need Support Reviewing Your Supply Chain?
Call us on 0118 315 1532 or get in touch to discuss your current approach to supply chain compliance.