After the tightening of off payroll rules for recruitment agencies with the introduction of joint several liability (JSL), the risk balance has shifted when hiring contractors, explains Dave Chaplin, CEO of IR35 Shield
For much of the last decade, many organisations viewed hiring off-payroll contractors on a self-employed basis as a significant compliance risk due to the off-payroll IR35 reforms. Faced with legal uncertainty, excessive tax risk and fear of HMRC enforcement, businesses increasingly adopted umbrella-only policies, believing them to be the safest option.
That assumption no longer reflects today’s reality.
How the risk landscape has changed
The three main risks associated with engaging ‘outside IR35’ contractors have been removed, and new tax avoidance legislation from April 2026 concerning umbrella company arrangements has created greater risks for recruitment agencies and end clients.
The umbrella model, once regarded as the safer choice, now carries greater financial risk than engaging contractors on a legitimate outside IR35 basis.
