Protecting agencies and workers through compliance, transparency, and financial stability

This is a guest blog by REC Business Partner, Paystream

With the upcoming joint and several liability (“JSL”) provisions coming into effect in April 2026, supply chain due diligence has never been more important. Recruitment agencies need to understand exactly how their umbrella provider operates, both from a compliance and financial stability perspective.

Below, we outline the steps we take at PayStream to protect agencies and their supply chains.

1. Due diligence measures to protect against JSL

JSL means agencies can be held responsible if an umbrella provider in their supply chain fails to meet its tax obligations. That’s why we place compliance and robust internal processes at the heart of everything we do.

We demonstrate due diligence by:

• operating a compliant Pay As You Earn (“PAYE”) umbrella model where all umbrella employee earnings are processed under the PAYE provisions;
• ensuring employment costs, such as National Insurance contributions (“NICs”) are calculated and deducted correctly;
• maintaining clear contractual relationships between us, the agency, and the umbrella employee; and
• following HMRC guidance and industry best practice across all payroll and employment processes.

2. Independent reassurance and audits

As a leading provider of umbrella and accountancy services, it’s important that we can demonstrate the highest levels of compliance to our agency partners. Independent verification plays a key role in providing that reassurance.

• We’re the only umbrella provider to invite a Big 4 accounting firm in to audit our payroll processes.
• We’re an FCSA accredited member, meaning we meet recognised standards of compliance, transparency and reliability.
• We’re SafeRec certified, meaning all payslips are independently audited in real-time, verifying that all taxes are correctly calculated and paid to HMRC.

3. Full transparency on contractor remuneration

Transparency around pay is essential for both contractors and agencies. At PayStream, we ensure our umbrella employees understand exactly how their earnings are calculated and paid.

This includes:

• providing an invoice reconciliation with each payslip, showing how an umbrella employee’s pay is calculated from gross contract income through employment costs to net pay; and
• clear communication so umbrella employees understand their pay structure before joining.

By ensuring remuneration is treated fully as employment income under PAYE, we provide clarity and remove ambiguity from the payment process.

4. Accurate and timely payments to HMRC

Accurate tax reporting and timely payments to HMRC are fundamental to operating a compliant umbrella provider.

We support this through:

• established payroll systems that calculate PAYE and NICs accurately;
• regular payroll processing with clear audit trails;
• ongoing reporting and payment of taxes to HMRC in line with statutory deadlines.

Our SafeRec certification also provides independent verification that these processes are working as intended.

5. Demonstrating financial stability

Non-compliance isn’t the only reason why an umbrella provider may fail to meet its tax obligations. Poor financial management can also lead to unpaid tax liabilities, which is why financial due diligence should be a key consideration when choosing an umbrella partner.

An agency should consider:

• running credit checks on their chosen umbrella providers;
• reviewing Companies House accounts; and
• requesting regular updates of the umbrella providers balance sheet.

At PayStream, we operate a strong financial control framework which is designed to demonstrate

financial stability and ensure that all statutory payroll liabilities, including PAYE and NICs, are fully safeguarded and paid on time.

We support this through:

• robust financial management and responsible business practices;
• established operational processes designed to ensure payroll continuity; and
• maintaining a sustainable and compliant business model focused on long-term stability.

By combining compliance, transparency, and responsible financial management, we aim to provide agencies and contractors with confidence that they are working with a trusted umbrella provider.

If you’d like to know more about JSL and what you can do to prepare, please visit our FAQ page here.

Learn more about Paystream