Crawford Temple, CEO and founder of Professional Passport, explains why his business supports HMRC’s Clear Line on Liability
Levelling the playing field (Global Recruiter 17th November 2025) by Jonathan Athow, Director General of Customer Strategy and Tax Design of HMRC, has served as a welcome but stark reminder about the steps HMRC has been forced to take to tackle non-compliance in our industry and why he believes Joint and Several Liability is the right approach in a bid to rid the industry of corrupt tactics.
Athow’s message has reinforced HMRC’s webinar messages and should remove any lingering doubt in the minds of recruitment agencies when it comes to JSL.
Whatever option an agency chooses when engaging umbrella companies, one truth now stands unchallenged: you must be absolutely certain of the company you are using, because if anything goes wrong and a liability is triggered, the agency will be picking up the bill. Athow and HMRC could not have been clearer.
During last week’s webinar, HMRC was asked a direct and critical question: If we do all the due diligence set out in the gov.uk guidance and the umbrella still fails to settle PAYE in full, does this provide an excuse under JSL? The answer was blunt: No. HMRC stated that using umbrella companies is a commercial choice. Therefore, in the event of non-compliance by the umbrella, the agency – or in some cases the end client – remains jointly and severally liable in all cases.
This, again, confirms what some of us in the industry have been saying for years: due diligence is a risk-management tool, not a shield. It has value, it informs decision-making, and it helps agencies avoid high-risk suppliers – but it will not protect an agency from liability where a shortfall in tax actually arises.
HMRC underlined this yet again in the same webinar. When asked whether there were any checks or evidence an agency could rely on to avoid JSL where a shortfall occurs, HMRC’s response was unequivocal: agencies and end clients will naturally want to undertake due diligence to mitigate risk, but there is no statutory excuse that removes liability. Due diligence may be best practice, but it does not absolve responsibility.
‘Focus on outcomes’
In his article, Athow also mentions the debate about what level of due diligence or audit trail will protect agencies from liability saying: “While good record-keeping helps agencies make informed decisions, it will not affect where the liability falls as our focus is on outcomes.”
For him and HMRC, the question is a simple one – and it is one that we at Professional Passport have long emphasised: has the PAYE been paid? Athow summarises it plainly: “If an umbrella company fails to pay what it owes to HMRC, the recruitment agency becomes liable regardless of what paperwork it has collected or other due diligence it has taken”.
This clarity matters. In another recent webinar, HMRC was asked: “Where there is a PAYE shortfall, will HMRC pursue the agency rather than the umbrella that failed to pay?” HMRC’s answer: Yes. This is not a grey area anymore. The operational reality is now crystal clear.
This clarity also highlights why agencies must reassess their current models. HMRC recognises, as does Athow, that there is a range of possible approaches agencies might adopt depending on their relationships with umbrella partners. But as HMRC itself has now openly confirmed – and as Professional Passport has consistently supported – the only option that eliminates risk entirely is for the agency to pay HMRC directly.
Paying PAYE directly is not the only option, but it is the only one that gives full certainty.
Beyond that, agencies broadly have three choices:
- Trust in the umbrella – choosing providers with proven compliance, transparency, and a track record of meeting tax obligations.
- After-the-event checking – validating payment evidence, though this still does not remove liability if something goes wrong.
- Paying PAYE directly – the only option that ensures absolute protection for the agency.
Each option comes with different levels of risk, responsibility, and operational complexity, but the liability outcome remains unchanged unless the agency takes direct control of the PAYE.
With April fast approaching, the countdown to the new legislation is well underway. And while the rules themselves may feel tough, they serve a purpose the entire sector should welcome: a level playing field. For too long, compliant agencies and umbrella companies have been undercut by non-compliant operators. Athow’s and HMRC’s stance – clear, uncompromising, and now repeatedly reinforced – should finally help remove those bad actors from the market.
Ultimately, that is what we all want: a fair, transparent, and compliant supply chain where workers are protected, tax is paid correctly, and reputable businesses can thrive on a level playing field without being undermined by those who refuse to play by the rules.
