Joint & Several Liability: What It Means for Recruitment Agencies — and How to Get Ready

On 12 June 2025, HMRC and HM Treasury met with key stakeholders from across the industry including SafeRec to discuss the future of umbrella company compliance. While no final decision has been made, HMRC confirmed a clear direction of travel: they intend to introduce joint and several liability (JSL) between umbrella companies and recruitment agencies.

Draft legislation is expected in mid-July, with implementation likely from April 2026. If you’re a recruitment agency, MSP, or end client, now is the time to understand what this change really means — and what you can do to protect your business.

So, what is Joint and Several Liability?

In simple terms, joint and several liability means that multiple parties can each be held fully responsible for a shared obligation. Under the proposed model, if an umbrella company fails to pay the correct tax, the recruitment agency that engaged them would also be held liable, even if they weren’t directly involved in the wrongdoing.

Imagine a group of friends at a restaurant. One person walks out without paying. Under joint and several liability, any one of the remaining friends could be forced to pay the full bill, regardless of who actually ordered what. It might not feel fair — but it’s legally enforceable.

That’s a significant shift. Until now agencies were held liable in specific scenarios (for example, under the Offshore Intermediaries legislation), HMRC is now signalling a move to extend that responsibility to a much wider set of circumstances. In effect, recruitment agencies will be forced to take full responsibility for the tax behaviour of the umbrella companies they work with.

Why Agencies Can No Longer Rely on Traditional Due Diligence

Many recruitment agencies have long relied on accreditations, policies, or occasional spot checks to assess umbrella compliance. These traditional approaches may provide some comfort — but they were never designed to prove, in real time, that the correct tax has been calculated, disclosed, and paid to HMRC.

From April 2026, that won’t be enough.

With joint and several liability, agencies can no longer assume that compliance sits solely with the umbrella company. If there’s an issue with PAYE or NICs, HMRC will be able to hold your agency responsible — even if you weren’t directly involved. The financial, legal, and reputational consequences could be severe.

And here’s the problem: most current due diligence frameworks simply don’t answer the key questions that really matter:

• Has tax been correctly calculated on each payslip?
• Has the correct amount been disclosed to HMRC via RTI?
• Has that tax actually been paid to HMRC?

Without clear, independently verified answers to these questions, agencies are exposed. And these aren’t hypothetical risks — we’ve seen real cases where seemingly compliant umbrellas failed to pay over tax, leaving the recruitment agency to face the fallout.

That’s why the traditional approach to umbrella due diligence is no longer enough. Going forward, compliance must be backed by hard evidence — not assumptions

You’ve got just over 9 months to act

The expected go-live for this reform is April 2026. That may sound like a long way off — but in reality, it gives agencies less than a year to audit their umbrella relationships, fix weak spots in their supply chain, and implement stronger due diligence processes.

Those who don’t act in time will face significant risk: not just in terms of liability, but also in losing clients who demand supply chain transparency.

The Solution: Real-Time Proof with SafeRec Certified Umbrella Companies

SafeRec supports over 7,000 recruitment agencies, MSPs, and end clients in transforming their umbrella company supply chains. Our solution is simple: we turn compliance into proof.

When an umbrella company is SafeRec Certified, every payslip and CIS Statement it issues is audited in real time. We cross-reference each one against the umbrella’s RTI submissions and HMRC tax account, verifying that taxes have been correctly calculated, accurately disclosed, and fully paid to HMRC.

As a recruitment agency working with SafeRec Certified Umbrellas, you receive:

• A Monthly Tax Compliance Report sent directly from SafeRec — independent, automated, and audit-ready
• Free access to full Legal Compliance Reports for each certified umbrella — available at SafeRec.co.uk — showing what contracts, policies, ownership, processes, and structure (and more) have been reviewed by a regulated UK law firm.
• Clear, real-time assurance that every payslip is accurate and tax-compliant
• Peace of mind that your umbrella partners are aligned with HMRC’s rules.

This isn’t just about ticking boxes. It’s about protecting your agency, your clients, and your contractors — with verifiable, independent proof of tax compliance.

What Should You Do Now?

Start by booking a demo of the SafeRec platform. In just a few minutes, you'll see exactly how it works — how every payslip is checked in real time, how we cross-reference with RTI submissions and HMRC tax accounts, and how you get clear, independent proof that the right tax has been calculated, disclosed, and paid. No guesswork. No chasing paperwork. Just real-time peace of mind.

Next, take a look at the List of SafeRec Certified Umbrella Companies. These are providers who’ve already gone through a full legal compliance review and are being audited on every payslip, every month. If you're looking to secure your supply chain today, it’s a great place to start.

Already working with an umbrella you trust? Ask them to get certified. The process is simple, and it shows clients and contractors that your agency takes compliance seriously — and is ready for what’s coming. It also gives you something most agencies don’t have: hard proof that you’ve done your due diligence.

The sooner you act, the more control you keep — over your supply chain, your risk, and your reputation. April 2026 isn’t far off. Now’s the time to get ahead.

SafeRec is here to help agencies meet the moment — with clarity, confidence, and proof.