In anticipation of the New Year’s compliance special in The Global Recruiter e-magazine we ask three organisations to answer three questions:
Crawford Temple, CEO, Professional Passport
Q: Do you think the proposed changes are fair and proportionate to the problem HMRC is trying to address?
A: The changes stem from widespread non-compliance in the sector, much of it linked to organised groups and connected parties. From HMRC’s perspective, action was necessary, and Joint and Several Liability (JSL) is the route they’ve chosen. In some ways, the approach is fair: by shifting liability onto agencies, HMRC believes it incentivises them to take greater control over who enters their supply chain, and will ensure that any underpaid tax can still be recovered.
However, what is unfair is that the individuals or organisations orchestrating non-compliant schemes are not held liable under the new rules. When a non-compliant umbrella enters liquidation, the agency may still be pursued for the outstanding liability, even if it has already paid the umbrella. This creates an imbalance in accountability.
Q: What should recruitment companies do now to prepare?
A: Recruitment companies need to understand the risks that the new legislation will introduce across the sector and their supply chains. To cut through industry speculation, noise and spin, we would urge agencies to refer directly to HMRC’s webinars and Q&A sessions on JSL. HMRC has been very clear and transparent about due diligence expectations, liability, recovery processes, and how JSL risks can be neutralised. These resources provide a solid foundation for agencies to shape an informed response and approach.
Agencies must also decide where they stand on risk, and how much risk they are prepared to take. This risk appetite will shape the solutions they adopt to navigate the new landscape. Ultimately, each agency must assess whether they are prepared to carry JSL risk or take steps to neutralise it entirely. Professional Passport Fortis is the only system that allows direct payment to HMRC under the new legislation from April 2026 effectively neutralising JSL to all relevant parties.
Q: What do you think will be the overall impact on the use of umbrella companies?
A: JSL has been introduced as part of HMRC’s broader strategy to address non-compliance within the umbrella sector but umbrellas will continue to play an important role. Some clients – especially those highly sensitive to financial or reputational risk – may decide to remove umbrellas from their supply chain altogether. But this will not be universal.
HMRC has also been clear that umbrellas have a legitimate place in the market and that shutting them down is not the goal. This is reinforced by the proposals within the Fair Work Agency and the Employment Rights Bill, which indicate an intention to regulate, not eliminate, umbrella companies.
Ultimately, the future of the umbrella market will depend on how well umbrellas can align their risk profile with each client’s appetite for risk. Some clients will prioritise risk mitigation at all costs, while others may be more comfortable accepting a degree of risk. As a result, the impact will vary – there is no single, definitive answer or one-size fits all solution.
