In our last article, we took a look at the UK Government's decision to introduce legislative changes in its efforts to tackle non-compliance in the umbrella company market.
If you haven't already seen it, you can read the article here.
The changes will have a significant impact on all parties within the temporary labour supply chain, perhaps not in terms of process, but certainly in terms of potential impact. The introduction of Joint and Several Liability (JSL) will place agencies directly in the firing line for any unpaid PAYE tax and NICs.
So, with less than eight months before the legislation takes effect, agencies have little time to lose in preparing.
What Should Agencies Do in Preparation for JSL?
The government has been explicit in its reasoning behind the legislative changes. By making agencies jointly and severely liable for PAYE tax and NICs, it aims to encourage agencies to “self-police” compliance in their supply chains.
In other words, by shifting liability to agencies, it expects agencies to take responsibility for ensuring compliance.
While the legislative changes won't take effect until April 2026, we'd encourage agencies to start preparing now.
What Should Agencies Do Now?
Champion Contractors recommends that agencies:
- Review your supply chain – Ensure that you are fully aware of all of the suppliers within your supply chain and ask yourself whether you are confident that you understand them to be fully compliant and transparent. If you can't say for sure, you need to check.
- Implement or strengthen due diligence processes – Evaluate your supply chain risk, conduct audits on your umbrella partners, verify accreditations, and maintain documentation. Ignorance is no longer an excuse.
- Engage your legal and compliance teams, or seek legal and professional advice – Contracts, policies, and processes may need updating to reflect new obligations and liabilities.
- Educate your teams and stakeholders – Awareness at all levels of your organisation is key to ensuring compliance and eliminating risk.
How Champion Contractors Can Support You
As a fully compliant, transparent, and accredited umbrella provider, Champion Contractors welcomes this legislation and the move toward better compliance and fairer standards in our sector.
- We already apply rigorous internal standards and transparent PAYE processes that align with the policy objectives set out by HMRC. Our agency partners can trust that:
- We never have, and never will, engage in disguised remuneration or tax avoidance schemes.
- All PAYE and NICs are correctly accounted for and remitted to HMRC in line with PAYE and UK tax law.
- We're fully prepared to meet any new compliance standards that may emerge as a result of these legislative changes.
- Our FCSA and SafeRec accreditations ensure that we are continuously held accountable to meet our legal obligations and industry gold standards.
Now is the perfect time
As an FCSA-accredited and SafeRec-certified umbrella company, Champion welcomes the moves to eliminate non-compliance and protect contractors. We're also determined to make sure that contractors and agencies can benefit from our knowledge and expertise in preparing for the changes.
If you have any questions or want to discuss how this change may affect your agency, please get in touch with our team on 0161 703 2549 or email info@championcontractors.co.uk.