What does umbrella company clampdown mean for recruitment firms?

Olivia Spruce, director of the Payroll Compliance Authority, examines how HMRC plans to deal with non compliance in the umbrella market will affect third parties due to new due diligence requirements

In a long-awaited crackdown on fraudulent activity prevalent in the umbrella company market, the chancellor announced at the Budget last October that legislation was on its way from April 2026 to tackle non compliance across the sector. The news was welcomed by many employment businesses, accrediting organisations and other stakeholders at the time.

But now that legislation is on the table, will it fix the sector?

Why legislate?

As those operating in the assignment-based contractor supply chain will know, the backdrop to legislation is years of fraudulent activity within the sector.

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