Umbrella Company Health Check
Health checks are crucial because they can identify potential problems early, often before symptoms appear, allowing for timely intervention and potentially preventing serious illness or complications.
The government are tackling non-compliance in the umbrella company market and have stated that “there is evidence of widespread non-compliance in the umbrella company market, depriving workers of the employment rights to which they are entitled, distorting competition in the labour market and leading to significant tax loss to the Exchequer.”
Be proactive and perform a supply chain and company health check. By being aware of the problems that may arise and knowing that issues may appear, it gives you the opportunity to deal with it before it becomes a critical emergency in your agency.
What does this mean for agencies and umbrella companies?
From April 2026, His Majesty’s Treasury has confirmed a model of Joint and Several Liability (JSL) to achieve contractor umbrella company tax compliance.
This means that under JSL, recruitment agencies supplying contractors to an end-hirer would need to ensure all deductions are correctly collected and paid to HMRC as they would be liable to HMRC for any PAYE and NICs not paid by the umbrella company.
If no agency is in the chain, the end-hirer would be responsible for PAYE/NICs if they contract with a non-compliant umbrella and there is a shortfall in tax. The Agency closest the end the end client will be liable, so if you are a Managed Service Provider ensuring any other Agencies in the process are compliant is critical.
What should agencies be doing now to prepare?
1.Take a look at your due diligence process – is it up to date? Do people understand it and follow it? Do you need to add anything to it or simplify any aspects?
2.Consolidate your PSL – there are so many umbrella companies out there. Make sure you’re working with the ones you can trust and who can prove their compliance.
3.Complete a review of your current supply chain – where is it strong and where are there potentially weak links? When did
you last make contact or visit a company in your supply chain?
Let us reassure you
We can be trusted. We’ve been around since 2002, supporting agencies big and small, making hundreds of thousands of payments each month. Want to visit us? We’re in Lancaster, minutes from J34 of the M6 motorway.
We care about people. We’re rated EXCELLENT on Trustpilot with reviewers commenting on our easy sign-up process and the quality of our aftercare.
We’re compliant and our accreditations demonstrate this. We’re FCSA accredited, SafeRec Certified and an APSCo Partner.
