Multiple PAYE References: Why it is essential for parties to Check payslips on the SafeRec Platform

For most businesses in the recruitment supply chain, a PAYE reference is probably not something that receives much attention.

It sits in the background of payroll, doing an important but largely unseen job: identifying the PAYE scheme through which workers are paid, information is reported to HMRC and liabilities are recorded. But when an umbrella company operates more than one PAYE reference, that small piece of payroll administration suddenly becomes much more significant.

For supply chains, understanding which PAYE references are being used, and how workers are being processed through them, is an important part of due diligence, and it becomes particularly important where a business is operating more than one.

Having more than one PAYE reference isn't, by itself, unusual or evidence of wrongdoing. There are plenty of entirely legitimate reasons an employer might run multiple PAYE schemes. The important question is whether the supply chain has enough visibility to understand what's actually happening across them, and under JSL, that question now carries real consequences for you, not just for the umbrella.

In this article, we'll break down what a PAYE reference actually means, why an employer might want more than one, what it means for compliance, and how the recruitment supply chain can engage without taking on the risk.

What is a PAYE reference?

When an employer registers to operate PAYE, HMRC issues a PAYE reference for that scheme. Every time payroll is run, information about workers, pay and deductions is submitted to HMRC through Real Time Information (RTI), and that submission sits against the PAYE reference.

So the PAYE reference is really the thread tying everything together: the worker, their payslip, the payroll data behind it, what's reported to HMRC, and the liabilities the employer owes as a result. Looked at on its own, any one of those tells you relatively little, a payslip only shows a worker what they've been told, RTI only shows what's been reported. It's when all of it is brought together that you get a clear picture of what's actually happened. Why might an employer have more than one?

There are legitimate reasons an employer might operate more than one PAYE reference. Larger organisations sometimes run different schemes for different parts of the business, and group structures, acquisitions, or historic arrangements can all leave a payroll with more than one reference behind it.

But there are less innocent reasons too. There can also be legitimate or less straightforward reasons for the way payroll is structured, including historic arrangements, group structures or the way different parts of a business are organised. Where multiple references are being used, the important question is whether the structure gives the supply chain enough visibility to understand how workers are being processed and what is being reported to HMRC.

None of this means multiple references are automatically a red flag. But it does mean the number of references matters less than the visibility you have across them. If workers are being processed through more than one PAYE reference and you can't see how, it becomes very easy to see one part of the picture without seeing the whole of it.

A simple example

Take an umbrella company running two PAYE references, in practice it could easily be more. Under the first, everything is done properly: payslips are audited, RTI are checked, and liabilities can be reconciled against what HMRC holds. That reference has a genuine audit trail behind it.

Imagine an umbrella company has 20 workers supplied by an agency. Eleven are processed through one PAYE reference and the remaining nine through another. Both references may look legitimate when viewed individually.

The problem arises if the agency's due diligence is not careful as to which entity processes their workers and if it is the same entity, which PAYE reference number has been used. It may have evidence that payroll is being operated correctly for those workers while having no equivalent visibility over the nine workers sitting on the second scheme.

From the agency's perspective, the question isn't why the second reference exists. It's whether it can follow the evidence for every worker it has supplied, regardless of which PAYE scheme processes them.

That's the risk with multiple references: it's not that a second reference exists, it's whether you can follow each worker's evidence through to wherever they actually sit. An audit of the first reference tells you nothing about the second. Worker-level evidence needs to follow the worker, not just the scheme.

Following the worker through the payroll process

The strongest compliance evidence is evidence you can follow.

Worker → payslip → payroll data → RTI → PAYE reference → HMRC records

The payslip should reflect the payroll data behind it. The payroll data should correspond with what has been reported through RTI. That RTI submission sits against a specific PAYE reference, and the resulting liabilities should be capable of being reconciled with the relevant HMRC records.

When those links can be followed for each worker, an agency has something much more useful than a general assurance that payroll has been audited: it has an evidence trail.

This is where SafeRec closes the gap

SafeRec Certified umbrella companies have their payroll independently audited using real evidence: payslips, RTI data, and the relevant HMRC information directly collected from the Umbrella Company HMRC Tax account using an isolated browser.

That evidence doesn't stop with the umbrella. In real time, recruitment agencies get access to a free online platform where they can see all the payslips audited. That lets recruitment agencies and end clients check that the workers you've supplied are genuinely sitting within the payroll population being audited, wherever they actually sit within that structure.

This is where SafeRec's approach is different. SafeRec connects directly into payroll data via API rather than relying solely on an umbrella company to select and provide the information it wants a recruitment agency to see. That means the audit trail is built from underlying payroll evidence. If a worker has been paid, the relevant payroll record exists within the data being reviewed. The agency isn't simply relying on an umbrella's statement that the worker has been included in an audited population, it can see evidence relating to its own workers.

Checking payslips on the SafeRec platform is absolutely essential for recruitment agencies, and for MSP, this is the only way to ensure that their workers are audited and received confirmation taxes have been paid to HMRC.

If an agency see any missing payslips on the SafeRec platform for their workers, it might mean their workers are paid via a different entity or paid via the same entity via a different PAYE reference number where taxes might not be paid.

SafeRec was built to bring transparency to payroll and tax compliance for the entire Labour Supply Chain, and it's completely free to access. That was a deliberate choice: to make sure that all agencies and all parties in the supply chain can check that their workers have been audited.

Sign up here: saferec.co.uk/sign-up