From 6 April 2026, recruitment agencies become jointly liable for unpaid PAYE. If your umbrella company fails to pay HMRC, your agency can be held responsible for the tax bill. JSL turns umbrella selection from a supplier choice into a legal risk decision.
What is Joint and Several Liability?
JSL means recruitment agencies are jointly responsible for unpaid PAYE tax when their umbrella company fails to pay HMRC. HMRC can recover the unpaid amount directly from the agency. It does not need to chase the umbrella first. The agency is liable as soon as the umbrella defaults.
Before April 2026, the liability chain was much simpler. The umbrella owed the tax. If it did not pay, HMRC chased the umbrella. Agencies faced reputational damage, but not direct financial exposure.
That changed from 6 April 2026. Legislation amending ITEPA 2003, and introducing Chapter 11, brought joint and several liability into the umbrella supply chain. Agencies using non-compliant umbrellas now face the same financial exposure as the umbrella itself.
The key word is “joint”. Joint liability means HMRC does not have to exhaust every other option before coming to you. They can come straight to your agency.
What does HMRC actually recover under JSL?
HMRC can recover unpaid income tax, employer NIC, and employee NIC from your agency. It uses the same debt recovery powers it uses against employers directly. Interest and penalties can be added on top of the original tax amount.
The unpaid PAYE starts with the umbrella failing to pass on what it collected. Contractors had tax deducted from their pay. The umbrella kept it. HMRC now has legal authority to recover that amount from the agency that chose to use that umbrella.
The sums can be significant. A mid-size agency placing 100 contractors at average day rates could face PAYE exposure in the hundreds of thousands of pounds if its umbrella collapses with unpaid tax.
This is not theoretical. HMRC published guidance confirming these recovery powers in early 2026.
Which agencies are affected?
Any recruitment agency placing contractors through an umbrella company is affected. That includes temporary staffing agencies, specialist contractor recruiters, and managed service providers. If your agency sits between the end-client and the umbrella, you are within the JSL chain.
The rule does not distinguish by size. A small agency with five contractors on umbrella PAYE carries the same legal exposure as a large recruiter with thousands. The only question is whether you used an umbrella and whether that umbrella paid HMRC.
Agencies that only place PAYE workers directly, without an intermediary umbrella, are not in scope. But for any worker paid through an umbrella, the agency is now a liable party.
How does FCSA accreditation reduce JSL risk?
FCSA-accredited umbrella companies are independently audited against strict PAYE compliance standards. Accredited umbrellas must pay HMRC correctly, avoid tax avoidance schemes, and keep payroll practices transparent. For agencies, using an FCSA-accredited umbrella is documented proof of responsible selection.
The FCSA audit covers payroll accuracy, HMRC payment records, contract terms, and how deductions are explained to contractors. Umbrellas that fail the audit lose accreditation.
For your agency, that audit trail matters. If HMRC investigates your supply chain under JSL rules, you can show that accreditation checks were part of your selection process. You acted responsibly. That is not a legal defence on its own, but it is evidence of documented due diligence.
Read the full detail on how to check umbrella compliance to understand exactly what FCSA and Professional Passport check.
What is Professional Passport and why does it matter separately?
Professional Passport is a separate independent accreditation body. Its audit covers PAYE operations, worker rights, contract terms, and payroll practices. It is not affiliated with FCSA. Passing the Professional Passport audit is a separate compliance check.
The two bodies do not share audit results. An umbrella can pass FCSA but fail Professional Passport, or the other way around. Holding both means the same company has passed two separate, independent compliance checks.
Why does SafeRec certification matter more than a badge?
SafeRec is not an annual audit. It receives every payslip the moment it is generated and cross-checks it against the RTI data filed with HMRC. It also checks the umbrella’s HMRC tax account every month. That confirms the PAYE was reported and actually paid.
Read that again in the context of your own liability. Under JSL, your exposure is unpaid PAYE, not poor paperwork. Unpaid tax.
FCSA and Professional Passport confirm an umbrella had sound processes when they looked. SafeRec confirms the money reached HMRC last month.
Those are different questions. Only the second one matches the risk you now carry.
If a certified umbrella’s payslips stop matching its HMRC filings, SafeRec flags it at once. You get the warning before HMRC comes to you.
What does full accreditation mean for your legal position?
An umbrella holding FCSA, Professional Passport and SafeRec has passed two independent audits and sits under continuous payroll monitoring. For your agency, this creates a documented compliance trail. If HMRC questions your umbrella choice, you have third-party evidence that the umbrella met compliance standards while you used them.
That is the strongest due diligence position available to your agency post-JSL. Very few UK umbrellas hold all three. The combination is what separates credible compliance from tick-box selection.
DASA holds all three. See our FCSA and SafeRec accreditation for full detail on what each body audited.
What practical steps should agencies take now?
Review your Preferred Supplier List. Any umbrella without current FCSA or Professional Passport accreditation should be replaced or placed on review. Keep written records of all accreditation checks. A date-stamped compliance log is your evidence if HMRC ever queries your supply chain.
Here is a basic framework to follow:
1. Check accreditation status for every umbrella on your PSL.
Do not rely on past checks. Accreditation can lapse. Check the FCSA and Professional Passport membership lists directly.
2. Ask for written confirmation of current PAYE compliance.
Request a sample RTI submission record and payslip structure. Non-compliant umbrellas avoid these questions.
3. Watch for high take-home pay promises.
Any umbrella offering contractors 80% or more take-home is signalling a non-PAYE arrangement. That is your liability, not theirs.
4. Document everything.
Date every check. Keep email records of accreditation confirmation. Store sample payslips. This log is your due diligence evidence under JSL.
For a step-by-step process, read how agencies choose an umbrella company.
A full JSL due diligence checklist for agencies is available here.
What happens if your umbrella is non-compliant and HMRC investigates?
HMRC can open an investigation into the umbrella’s PAYE records. If unpaid tax is found, HMRC issues a joint liability notice to the agency. The agency has a limited window to respond. HMRC can then pursue the debt using standard enforcement powers — including charging orders against business assets.
Ignorance is not a defence under JSL. The legislation does not require HMRC to prove the agency knew the umbrella was non-compliant. It only requires that the agency used the umbrella and that the umbrella defaulted on PAYE.
The time to act is before any investigation opens. Changing your PSL and documenting your due diligence now puts you in the best position.
Speak to a payroll solution for agencies that already holds FCSA, Professional Passport and SafeRec accreditation.
