If you’re a recruitment agency that uses umbrella companies, the upcoming Joint and Several Liability (JSL) rules should be firmly on your radar. The good news is that, unlike previous legislative changes like the off-payroll working rules, we’re already seeing larger agencies put their preparation plans into motion well ahead of April 2026. However, others are still waiting until closer to the deadline to take the necessary action.
What these agencies may not realise is that JSL applies to all payments made on or after 6th April 2026, regardless of when the work was completed. So, if a contractor completes work in March but the invoice is paid in April, your agency could be liable under JSL for any unpaid tax and National Insurance Contributions (NICs), if the umbrella company involved failed in its obligations to send HMRC all necessary deductions.
Let’s explore why delaying your preparations could be risky, and why it’s still not too late to act, no matter where you are in your JSL journey.
A quick recap – what is JSL?
Under the proposed JSL legislation, HMRC can pursue tax and NICs liability from the umbrella company and the agency holding the contract with the end client for the supply of the worker (ie the top tier agency, or Managed Service Provider). If there is no agency in the supply chain, the liability will fall on the end client.
This is a strict liability offence meaning there’s no statutory defence for an agency that acted reasonably or conducted due diligence before engaging an umbrella company.
Why robust PSL’s need to be implemented by March 2026 at the latest
Here’s the critical detail that many agencies may be missing: JSL applies to payments made on or after 6th April 2026, not the date the work was completed.
This means:
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If a contractor carries out work in March, but is paid in respect of that on or after 6th April 2026, the payment is still within scope of JSL
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Therefore, you need to immediately start enforcing your strict PSL, so that there are no contractors performing work under non-compliant umbrella companies that may be due payment on or after April 2026.
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Waiting until April to implement changes won’t protect you from liability for past placements that are billed later
To protect your agency from financial risk, you’ll need to have confidence in your supply chain and ensure any changes are active by March 2026.
How PayStream can help your agency prepare
At PayStream, we’ve helped hundreds of recruitment agencies navigate legislative changes, such as the IR35 reforms, with minimal disruption and maximum confidence.
We offer flexible, practical support to suit your agency’s needs:
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Expert guidance on the best way to review your current umbrella Preferred Supplier List (PSL), identifying any risks along the way
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Complete switcher project support, we’ll manage the end-to-end transition of contractors from providers who may be exposing you to unnecessary risk
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Our infrastructure is built for speed and scalability, whether you’re managing a handful of contractors or thousands.
Don’t leave it too late, act now to protect your business
With the countdown to April 2026 well underway, it’s crucial to act now. Waiting until March to start implementing your plans could expose your agency to financial and reputational risks that are entirely avoidable. It’s not too late. If you start your JSL readiness project now, you can still have full implementation by March, as long as you work with a provider that has a proven track record of switching contractors quickly and efficiently.
If you'd like to discuss how to prepare your agency for JSL, our Key Account Managers are here to help.
