Gemma Stack, employment tax principal at Ryan, explains how new PAYE clampdown on umbrella companies means recruiters and employers in the supply chain can be held jointly liable for unpaid tax and national insurance by HMRC
New umbrella company PAYE rules came into effect in April 2026, introducing joint and several liability (JSL) for unpaid PAYE and National Insurance contributions (NIC). HMRC can now pursue other parties in the labour supply chain for unpaid PAYE and NIC, regardless of where the underlying noncompliance arose.
This sits against the backdrop of a large and complex market. Around 700,000 individuals work through umbrella companies in the UK, according to HMRC estimates. The Office for Budget Responsibility (OBR) projects that the new rules will raise £870m by 2027, reflecting the scale of non-compliance these reforms are designed to address.
For recruitment agencies, this moves PAYE risk from a largely indirect exposure to a direct and potentially immediate liability. The question is no longer whether providers have been checked, but whether agencies can stand behind how every worker in their supply chain is paid.
