The Joint & Several Liability (JSL) legislation governing contractor umbrella companies is doing much of what HMRC intended since it came into force almost 100 days ago. The government’s message behind JSL, too, is being taken seriously, as we’re seeing more contractors now being paid through umbrellas that are outwardly demonstrating a stronger commitment to transparency, best practice and compliance.
Taking JSL seriously in 2026/27 invariably means three things:
- Accreditation (from a trusted, respected, established accreditation body)
- Real-time checks
- Clearer contracts.
While welcome, this three-fold reality is much more nuanced than many umbrella company contractors were told to expect before HMRC’s JSL legislation was introduced on April 6th 2026.
Indeed, on the eve of 2026/27, some contractors were warned that smaller umbrella companies would cease operations, the bigger umbrellas would dominate, and all non-compliance would vanish.
But 100 days in, JSL's effects have been HMRC-intended yet not this dramatic, writes Ashley Olliver, a director at Parasol, an FCSA-accredited umbrella company. That's the verdict I heard on June 23rd at a seminar in Manchester, hosted by contractor payroll recruitment specialist CMR, featuring advisers from audit company SafeRec, legal advisory Brabners and software firm My Digital.
Nonetheless, JSL achieving the desired effect for HMRC is not the whole picture.
What has JSL changed?
The clearest shift that JSL has triggered in the umbrella contractor space is due diligence.
Facing liability for unpaid PAYE and NICs further down their supply chains, MSPs (Managed Service Providers) and larger recruitment agencies have put their umbrella partners through real scrutiny.
What do MSPs expect from an umbrella under JSL?
The JSL-driven criteria that MSPs and larger agencies are now consistently looking for include:
- Recognised accreditation for their prospective umbrella company partner(s)
- Financial stability (visits to Companies House, caseboard.io and the like must be soaring)
- Visibility of payments reaching HMRC (and the payments need to be correct)
- Excellent level of customer service (for all prospective partners/users of the umbrella)
- Clearer contractual terms (including for the umbrella’s contractors).
Has JSL impacted PSLs?
Preferred Supplier Lists (PSLs) have been trimmed since JSL took effect 100 days ago.
And the providers left on those PSLs are, by and large, those whose evidence of JSL compliance is forthcoming, robust and compelling.
In short, “the lesson from the first few months since JSL went live is that compliance is now the entry requirement on a PSL – not the differentiator.” (CMR’s Josh Bramhall).
The June 23rd seminar also heard that contractor recruitment agencies have, in the main, welcomed the opportunity to better manage their preferred providers:
“Post-JSL, we have seen the empowerment of recruitment agencies that have adopted best practices. That includes agencies pushing back against contractors where those agencies are of the belief that the contractors’ preferred umbrella companies are not compliant with HMRC or other government department rules.”
(Seminar participant Matt Knowles, of recruitment agency NorthStar People).
Did JSL for umbrella companies cause a big shift?
Not the dramatic shift many predicted — the 'winner-takes-all' consolidation some parts of the market expected has certainly not materialised.
Instead, the commercial gains appear to have been spread across much of the outwardly compliant umbrella company population, notably those that operate on multiple MSP and Neutral Vendor PSLs.
According to My Digital data, the number of accredited umbrella companies that opted for real-time audits grew by around 14% in the period either side of April 2026. That compares to roughly 8% recorded across the broader population.
“Umbrella companies that have been able to demonstrate their compliance credentials and win spots on MSPs’ PSLs are the main beneficiaries post-April. Our data suggests that the sharp movement of volume some expected following the JSL legislation is actually more gradual, but the trend towards compliance is visible in the numbers.” (My Digital’s Dan Moss).
Has JSL led to more umbrella companies using real-time tax audit certification?
Since the announcement of Joint and Several Liability (JSL) in July 2025, the number of umbrella companies choosing an accreditation that includes real-time tax auditing of their payslips and payments to HMRC has doubled.
And at the time of writing, 68 umbrella companies have achieved SafeRec Certification.
We believe that this increase in real-time audits by umbrellas reflects a growing recognition across the market that independent assurance is becoming an increasingly important way for contractor umbrella companies to address:
- Transparency
- Trust
- Differentiation.
“Since the beginning of the year, more than 4,000 recruitment agencies have registered on the SafeRec platform. For us, that is one of the clearest indicators that agencies are taking Joint and Several Liability seriously. They are looking for practical ways to demonstrate compliance, provide evidence to their clients, and better understand the risks within their labour supply chains. That is a hugely positive step forward for the industry and, ultimately, for the protection of workers.”
(SafeRec’s Sebastien Sauca)
[Editor’s Note: HMRC told ContractorUK on April 23rd 2026 that whether or not an umbrella company uses accreditations, payslip-checking technologies or other products will not affect how the Joint & Several Liability legislation applies.]
Has JSL stopped non-compliance with HMRC rules?
The non-compliant models that JSL is meant to squeeze out remain stubborn and continue to threaten contractors, despite some progress in the new legislation’s first 100 days.
For example, Mini-Umbrella Company structures and PAYE-Credit arrangements have continued to operate post-JSL, and new tax avoidance schemes continue to surface.
So although compliance in the contingent labour market is moving in the right direction, JSL and HMRC’s other frameworks haven’t cleansed it of operators who are willing to cut corners and take advantage of less experiencedand less diligent agencies.
As MSPs and larger agencies place greater value on accreditation and financial stability, the umbrella companies that can’t meet these criteria are moving down the supply chain to the smaller agencies, who are not always checking compliance. And these are the agencies now carrying real exposure, meaning it’s these smaller recruiters we’d advise contractors to be extra wary of.
Who isn’t up to speed with JSL?
The potential exposure to JSL is most concerning for the businesses that are least able to spot it, and 100 days into JSL, we find those businesses to be smaller agencies.
After all, a large share of recruitment agencies employ fewer than ten people and have only limited access to compliance expertise. They lean on trade bodies, legal advisers and umbrella partners for guidance. Some agencies remain unaware that JSL applies to them at all.
But it’s not just tiny agencies that aren’t up to speed with JSL. Therefore, I’d echo a call made at the seminar that greater overall education on JSL by HMRC is urgently needed:
“In my experience, whilst the supply chains containing larger agencies and/or MSPs were on the front foot with JSL, many smaller agencies, and the majority of end-user clients, are still either completely unaware of JSL, or unaware of the details and the potential liabilities it creates.
“There remains a pressing need to educate the whole labour supply chain about JSL. This presents an opportunity for compliant umbrella companies to proactively contact their supply chain partners to explain what they are doing to ensure compliance, increase transparency and reduce risk, and potentially to win new business in the process.” (Brabners’ Hannah Morrison).
What is HMRC’s next compliance challenge?
HMRC's next challenge is ensuring that JSL awareness reaches every agency, regardless of size.
And the seminar heard why this is the case.
“HMRC must plug the JSL education gap, regardless of recruitment company size, because JSL has the potential to affect not only an agency's financial position, but also its reputation, client relationships and ultimately the value of the business itself if the owners are looking to exit.” (SafeRec’s Sebastien Sauca)
What is the new tax scheme?
Aside from JSL, the latest tax scheme for contractors and other supply chain parties to watch out for is the so-called 'Bill of Exchange' arrangement.
Bills of Exchange are still being promoted as a way to settle tax debts, but it’s a way that HMRC has stated very clearly that it will never accept.
HMRC published a tax fraud warning on the scheme on May 13th 2026.
Is the Fair Work Agency interested in umbrella companies?
Enforcement is broadening, too. The Fair Work Agency (FWA) — the new body consolidating labour market enforcement — is now part of the umbrella company scrutiny landscape, alongside HMRC.
However, awareness of the FWA is still low among the smaller agencies. They are the agencies that we believe would gain the most from understanding the FWA’s operation.
Is HMRC cracking down on umbrella companies?
Despite JSL being 100 days in, HMRC is not about to ease off its crackdown on umbrella companies.
HMRC has estimated that JSL, as a tax reform of umbrella companies, will protect around £2.8 billion in tax revenue over five years, from 2025-26 to 2029-30.
We think this estimate alone shows how seriously HMRC is treating umbrella company tax compliance.
The takeaway
Against this backdrop of HMRC’s seriousness, it’s hard not to conclude that vetting an umbrella supply chain is now a continuous discipline, particularly with JSL now in force.
Non-compliant contractor umbrella companies are still operating in 2026/27, and the consequences for those recruitment agencies that engage them have the potential to be devastating.
Compliance is now the price of entry into the umbrella contractor landscape if you’re a provider, but the agencies and supply chains that keep investing in their due diligence will be the ones best placed for the next 100 days — and beyond.
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