Bills of Exchange: Here’s what caught my attention as an umbrella compliance expert

When HMRC issued its May 13th 2026 “fraud warning” regarding Bills of Exchange arrangements, it would have been easy to dismiss it as another obscure tax avoidance story.

After all, the technical position is relatively straightforward.

HMRC has made it clear that Bills of Exchange cannot be used to settle tax liabilities and do not avoid the new umbrella legislation, which was introduced on April 6th 2026.

What caught my attention wasn't the arrangement itself. It was the reaction, writes Shelley Ankers-Wainwright, managing director of compliance advisory Umbrella Ready.

Just what WAS the reaction to HMRC’s Tax Fraud alert?

Within hours of HMRC’s tax fraud warning being published, the topic of Bills of Exchange was being discussed across industry forums and professional networks.

More notably, I spotted recruitment agencies moving to quickly seek assurances from umbrella providers; compliance advisers reporting a spike in enquiries and whispers of ‘third parties’ actively promoting Bills of Exchange arrangements within the labour supply chain.

Whether those whispers prove to be convincing or not almost misses the point.

What’s the real story about Bills of Exchange?

The fact that agencies are discussing Bills of Exchange; that advisers are immediately being asked about them, and that HMRC felt the need to issue a public warning demonstrates how quickly the issue gained traction.

For me, that is the real story.

Why did HMRC's Bills of Exchange warning stand out?

What also caught my attention was the speed of HMRC's response to Bills of Exchange.

By specifically referencing the recruitment and temporary labour sector, HMRC signalled that this was not simply a theoretical concern but an emerging risk.

The fact that the UK tax authority also addressed claims that Bills of Exchange seek (unsuccessfully) to avoid the new umbrella rules — Joint & Several Liability (JSL) legislation —  indicates such claims were already circulating within the market.

Has the umbrella company market come a long way on compliance?

Four or five years ago, when umbrella accreditation bodies were being urged to do more on compliance, a niche arrangement such as Bills of Exchange might have generated little more than a shrug from the marketplace.

Today, in 2026/27, agencies — a key umbrella company partner — seem far more willing to ask questions.

Is Joint and Several Liability (JSL) already having a positive impact?

Since the new tax year began on April 6th 2026, agencies and end-clients have become far more focused on understanding the businesses operating within their supply chain.

Questions that may previously have been reserved for compliance teams are now making their way into commercial discussions.

Due to JSL, businesses want reassurance that the tax due on worker earnings is being accounted for correctly and that they understand the risks within their supply chain.

What’s the irony of JSL and Bills of Exchange?

There is perhaps a certain irony as we stand at the JSL-Bills of Exchange intersection.

For years, compliant umbrella companies, agencies and advisers have called for greater regulation and stronger enforcement action to create a ‘level playing field,’ to drive non-compliance out of the contractor supply chain.

Now that we are beginning to see significant legislative change for umbrella companies, even with follow-up sounds of enforcement from HMRC, it appears some pockets of the market may already be searching for ways around it.

A familiar pattern

Anyone who has worked in the UK’s umbrella contractor sector for a while (and has the 10+ years’ experience that I have, for example) will recognise the pattern.

Whenever HMRC rules tighten, alternative models tend to emerge claiming to offer a better, simpler, or more tax-efficient solution.

What are ‘red flag’ phrases about Bills of Exchange?

The challenge for contractors — and their staffing agencies concerned about HMRC liability under JSL — is that these models are often marketed using familiar language:

• "We've found a better way…"
• "This is fully compliant…"
• "HMRC doesn't like it, but our KC says..."

There will be variants and indeed others, but these three sentences should raise red flags immediately.

That is not to say that EVERY new operating model is going to be problematic. However, it does reinforce the importance of asking questions.

What questions should contractors and recruiters ask to avoid nasty HMRC surprises?

Four immediately spring to mind:

• How does the model work?
• How is tax being paid?
• What evidence supports the claims being made?
• Who carries the risk if something goes wrong?

In my experience, genuinely compliant providers are usually happy to answer these four questions.

Pose this quartet if you’ve got suspicions.

How will HMRC’s Bills of Exchange alert go down in the history books?

The Bills of Exchange ‘JSL bypass’ may ultimately prove to be little more than a short-lived distraction.

However, the umbrella company marketplace’s reaction to it tells us something new and important.

Why is the industry response to Bills of Exchange encouraging?

While it is disappointing to see yet another ‘creative’ arrangement being discussed not even two months after the introduction of JSL, I’m encouraged by the response from across the sector.

Agencies are asking searching questions, providers are being challenged on their claims and technical arguments, and businesses clearly want to better understand how models operate, extending to where HMRC risk sits within the supply chain.

Will the next ‘JSL workaround’ get the same treatment?

The Bills of Exchange reaction might even make any party behind any emergence of a subsequent ‘JSL workaround’ pause for thought.

For now at least, in a post-JSL world, businesses appear increasingly up for understanding not only who they engage, but also how those businesses operate, and with what internal and external mechanisms.

If the Bills of Exchange story encourages more due diligence, more scrutiny and more informed conversations across the supply chain, perhaps some good will even come out of it.

The future

With much of the UK umbrella company market seemingly on the compliance front foot, a future job for some of having to promote the next ‘JSL workaround,’ perhaps ‘Bills of Exchange 2.0,’ now looks unenviable, at best.