What’s changing and why it matters
From April 2026, HMRC will have the power to recover any PAYE shortfall from the lead agency or MSP where an umbrella company in their supply chain has failed to pay the correct tax.
This new Joint and Several Liability (JSL) framework means that:
- Liability applies even if you did nothing wrong
- Due diligence does not remove liability
- HMRC can pursue the full unpaid amount, not just a share
The risk: A non-compliant or financially unstable umbrella could expose you to substantial tax bills, reputational damage and loss of client trust.
Where the risks lie
- Untaxed or misused expenses: Some umbrellas still pay workers non-taxable expenses without robust eligibility checks. Impact: PAYE underpayments and potential retrospective HMRC claims.
- Financial instability and poor governance: Umbrellas can fail due to overextension, debt or unpaid HMRC liabilities. Impact: When an umbrella collapses, the PAYE tax liability transfers up the chain to you.
- Non-compliant payroll models: Mini-umbrellas, loan schemes, offshore fronts or CIS misclassification. Impact: HMRC deems these models as tax avoidance, with full PAYE recoverable from you.
- Lack of visibility and evidence for MSPs: MSPs often lack direct proof that umbrellas further down the chain calculate and pay tax correctly. Impact: No clear audit trail when HMRC investigates.
Why traditional due diligence isn’t enough
There is no carve out or exemption even if you have carried out thorough due diligence checks. You can perform every reasonable check - reviewing payslips, RTIs and certifications - and still be held fully liable if the umbrella company later fails to pay HMRC for any reason.
Some umbrellas appear compliant until sudden financial collapse or HMRC intervention. A resilient compliance approach therefore requires ongoing KYC checks, continuous visibility, verified data and proof of PAYE payment - not just initial onboarding reviews.
How Giant helps you mitigate these risks
Revolutionary Giant CompliancePro portal:
- Line-by-line monthly reconciliation and access to every payslip
- HMRC Government Gateway evidence showing PAYE is fully paid
- Real-time dashboards across the supply chain
Payslip verification with SafeRec
- Every payslip independently audited and verified in real time
- All tax deductions are validated against live HMRC data feeds
- Backed up with transparent audit reports
Financial strength and stability you can trust:
- 35+ years’ experience as a compliance-first payroll partner
- £1bn+ annual payroll, strong credit rating
- Regular HMRC oversight
- Owner-managed for long-term stability
Compliance by design and controls:
- Expenses taxed by default
- Full adherence to supervision, direction & control (SDC) rules
- Transparent supply chain controls and KYC checks
The smart path forward for agencies and MSPs
- Review your umbrella supply chain
- Mandate a PSL of financially sound umbrellas
- Demand evidence, not promises
- Educate your teams
- Partner with compliance first providers like Giant
Conclusion: Beyond risk - towards trust and growth
The 2026 JSL legislation demands a new standard of transparency, governance and partnership. With Giant’s CompliancePro Portal, SafeRec payslip verification and 35 years of compliance leadership, agencies and MSPs can avoid risk and build stronger, more trusted relationships.
