Q12: How do the new Joint & Several Liability (JSL) rules for umbrella companies interact with existing legislation, including agency rules and the off-payroll working rules (IR35)?

HMRC The new Joint and Several Liability (JSL) rules apply where workers are employed by an umbrella company.

The April 6th 2026 rules do not apply where a worker is treated as an employee only by other tax legislation — for example, the agency rules, the off-payroll working rules (also here), the managed service company rules, or salaried members rules.

In those cases, the existing rules continue to apply as normal.

There is one important exception. Where a business claims to operate as an umbrella company but does not actually employ workers in the way a genuine umbrella company would, the legislation treats the worker as employed by that company anyway — and joint and several liability applies as a result.

This is designed to prevent businesses from structuring arrangements to avoid the new rules. Detailed guidance on when this aspect of the JSL rules — the purported umbrella company provisions — applies can be found in Employment Status Manual, specifically ESM2440.

Q13: Under what circumstances will HMRC pursue agencies or end clients where ‘due diligence’ has been undertaken on the umbrella company by those parties?

HMRC Joint and Several liability will arise for “relevant parties” regardless of whether due diligence has been undertaken.

The liability will be discharged if it is settled by the umbrella company. Where this is not the case, HMRC will seek to recover the underpayment from relevant parties. There is no statutory defence if relevant parties have undertaken due diligence checks.

Q14: What role, if any, do industry accreditations, certifications, or payslip-checking technologies play in JSL compliance or HMRC enforcement decisions?

HMRC HMRC does not endorse third-party bodies or products, but does recognise the efforts of the membership and accreditation bodies to raise standards in the recruitment sector.

It is for individual businesses to decide whether they want accreditations or other products to form a part of their due diligence processes.

Whether or not a business does this will not affect how the Joint & Several Liability legislation (found at Chapter 11 ITEPA 2003) applies to them.

Q15: In what circumstances will HMRC notify agencies or other parties that an umbrella company is non-compliant?

HMRC The new JSL rules allow HMRC to disclose relevant information to a business that we consider is, or may be, jointly and severally liable to pay a sum under the April 6th legislation.

The disclosure could include identifying the umbrella company concerned and the extent of the potential liability.

This will allow HMRC to inform businesses that they are using a non-compliant umbrella company, giving them the opportunity to act before HMRC reaches the point of issuing a determination of underpayment.

HMRC also maintains a published list of avoidance scheme promoters, including umbrella companies. You can read the list, “Current list of named tax avoidance schemes, promoters, enablers and suppliers,” here.

[Editor’s Note: ContractorUK’s latest coverage of the list “Number of newly blacklisted tax avoidance schemes appears to slump, just as JSL bites,” is here.]

Q16: What HMRC measures are in place to prevent JSL avoidance behaviours such as phoenixing or deliberate non-compliance to shift liability?

HMRC The new rules are one of many tools that HMRC has to tackle non-compliant behaviour in the umbrella company market, including existing powers to address phoenixing, such as pursuing directors of dissolved companies where non-compliance is identified.

The new JSL rules will drive behavioural changes in the market — making it significantly harder for non-compliant umbrella companies to enter labour supply chains in the first place.

Q17: What is the best Joint & Several Liability guidance HMRC has published for workers when selecting or being directed to umbrella companies?

HMRC HMRC has published a range of guidance to support workers who are or may be engaged by an umbrella company. This includes:

• Guidance about working through an umbrella company, at https://www.gov.uk/guidance/working-through-an-umbrella-company
• A tool to help workers estimate their pay from an umbrella company, at https://www.gov.uk/guidance/work-out-pay-from-an-umbrella-company
• Guidance about tax avoidance schemes offered by some umbrella companies and how to avoid them, at https://dontgetcaughtout.campaign.gov.uk/tax-avoidance/

Q18: What impact does HMRC expect JSL to have on the structure of the umbrella market, including smaller providers?

HMRC Contractor recruitment agencies that currently use umbrella companies can continue to do so, and HMRC expects compliant and well-managed umbrella companies and payment intermediaries to remain a valued part of the temporary labour market.

Some agencies may now choose to administer payroll directly, as they are entitled to do, but this is not a requirement of the new JSL rules, effective since the start of tax year 2026/27.

Q19: What lessons from the implementation of the off-payroll working rules has HMRC applied to the introduction of JSL?

HMRC The Off-Payroll Working (OPW) rules have been in place for over 20 years and are designed to ensure that individuals working like employees but through their own company, pay broadly the same income tax and NICs as those who are directly employed.

Although both JSL and OPW relate to the contingent labour market, the reform of the off-payroll working rules and the introduction of new rules for businesses that use umbrella companies are separate policies that take different approaches to address distinct issues.

Q20: What would HMRC's message be to contractors reluctant to come forward about a non-compliant umbrella because they don't want to land their agency with a tax bill?

HMRC We would encourage workers who are engaged via non-compliant umbrella companies to remove themselves from these arrangements.

The new JSL rules do not change the fundamental principle that individuals are ultimately responsible for their own tax liabilities.

We would direct such workers to helpful guidance we have published online, entitled “Get Out of a Tax Avoidance Scheme.”

We would also say that the longer an agency continues to use a non-compliant umbrella company, the greater the underpaid liability it will be held responsible for. It is in the agency's best interests to stop using a non-compliant umbrella company at the earliest possible opportunity.

Q21: Does HMRC maintain that contractors are beneficiaries of the JSL rules, even though many contractors report being directed to umbrellas they don't wish to work through?

HMRC Contractors and other workers who are caught up in non-compliance by umbrella companies may find themselves receiving large, unexpected bills for Income Tax and National Insurance contributions that have not been paid to HMRC by these umbrella companies.

Preventing workers from facing such bills is one of the government's main aims for this policy change.

The new JSL rules will drive greater due diligence in labour supply chains and stop non-compliant umbrella companies from becoming involved in supply chains in the first place.

This will reduce the harm caused to workers by not having the correct tax deducted from their pay and remitted to HMRC. It may also, indirectly, reduce the harm caused by other types of non-compliance, such as a failure to properly provide statutory payments or employment rights.