Umbrella company Compliance: what joint & several liability means for recruitment agencies — and how to prepare

This is a guest blog by REC Business partner, SafeREC.

There’s a major shake-up coming to umbrella company regulation — and recruitment agencies are right at the centre of it. 

Following a pivotal stakeholder meeting on 12 June 2025, HMRC has confirmed its intention to introduce joint and several liability between agencies and umbrella companies. The draft legislation is expected as early as July, with implementation slated for April 2026. 

If that sounds like a long way off, it’s not. Agencies now have fewer than nine months to put robust, auditable processes in place — or risk becoming financially liable for tax shortfalls they didn’t cause. 

What Is joint and several liability — and why does It matter? 

In simple terms, joint and several liability (JSL) means HMRC will have the power to pursue recruitment agencies for unpaid PAYE, National Insurance, or other taxes — even if the non-compliance originated with an umbrella company. 

You read that correctly. Even if your agency had no hand in the mistake, and even if your contract says otherwise, you could still be held fully responsible for the entire tax debt. 

It’s not just a technical shift. It’s a complete change in how responsibility is assigned — and it demands a very different approach to compliance.

Why your current checks may not be enough 

For years, agencies have relied on accreditations, occasional audits, or policies and contracts to vet umbrella companies. These may offer peace of mind — but they won’t hold up under the new rules. 

HMRC isn’t interested in how thorough your PSL process looks on paper. What matters is whether tax was correctly calculated, reported, and paid — and whether you can prove it. 

Ask yourself: 

• Can you independently verify that every umbrella on your PSL is processing payslips correctly? 

• Do you have real-time visibility over how taxes are reported to HMRC? 

• If challenged tomorrow, could you provide evidence that all due tax has actually been paid? 

If the answer to any of these is “no” or “I think so”, now is the time to act. 

A ticking clock — but there’s still time

The expected rollout in April 2026 might feel distant, but when it comes to compliance transformation, it’s right around the corner. Agencies must begin reviewing their PSLs, closing compliance gaps, and shifting away from traditional due diligence towards real-time, provable verification. Because once the law is passed, there will be no grace period — and no plausible deniability. 

A smarter way forward: working with SafeRec certified Umbrellas  

This is where technology can make all the difference. SafeRec has become the go-to platform for more than 7,000 agencies and MSPs looking to protect themselves against non-compliance from Umbrella Companies in their supply chain. 

Here’s what SafeRec offers: 

• Real-time Payslip Audits: Every payslip and CIS statement is audited in real time, cross-checked against RTI submissions and HMRC’s tax accounts — confirming taxes were correctly calculated, reported, and paid. 

• Monthly Tax Compliance Reports: Agencies receive automated reports showing that all umbrella taxes were correctly calculated and paid — giving you a watertight audit trail. The principle here is very much the same, and the result then was that agencies stopped working with MSPs. 

• Access to a free Legal Compliance Report: Every SafeRec Certified Umbrella is independently reviewed by a regulated UK law firm. Their full legal report is available anytime at saferec.co.uk. 

Working with SafeRec Certified Umbrella Companies is your safeguard against a growing regulatory threat — and it’s free for agencies to use. 

Two steps to take right now

1. Browse SafeRec Certified Umbrellas: These providers are already being audited in real time and meet the standards HMRC will expect. You can have access by clicking on this link: https://saferec.co.uk/certified-umbrellas 

2. Request a Free Consultation: Understand exactly how SafeRec works — and how it protects your agency and reputation. SafeRec will also help you plan your strategy and do the heavy lifting so you can focus on what matters most to you — running your core business. Book a consultation by click here: https://saferec.co.uk/contact?reason=book-demo&product=umbrella-due-diligence 

Whatever your starting point, taking these two steps today puts you on the front foot for April 2026 — and gives your clients the confidence they deserve. 

This is about preparedness 

Joint and several liability isn’t a hypothetical risk. It’s a real shift in enforcement that will put the financial health of agencies working with non-compliant umbrella companies at stake. 

But with the right approach — and the right partners — you can move from reactive compliance to proactive protection. 

SafeRec gives you more than oversight. It gives you evidence. 
So if HMRC comes calling, you’re not explaining — you’re showing. 

In a time of growing liability, compliance isn’t about what you say — it’s about what you can prove. 

Get started today at saferec.co.uk 
Check the list of SafeRec Certified Umbrella Companies now: https://saferec.co.uk/certified-umbrellas 

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