On 21st July, HMRC released its Transformation Roadmap setting out its strategic objectives to:
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Close the tax gap
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Improve day-to-day performance and the overall customer experience
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Reform and modernise tax and customs administration
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Build a high-performing organisation with a skilled and engaged workforce
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Support wider government economic aims through HMRC’s work
The report reiterated the Government’s directive to crack down on tax avoidance and to prevent non-compliance. To this end, HMRC has released draft legislation, due to take effect April 2026, that will hold recruitment agencies that use Umbrella companies accountable for PAYE on workers’ pay.
The intent of the legislation is targeted at preventing non-compliant Umbrella companies from being used in fraud and tax avoidance. As a compliant Umbrella company, this is welcomed. HMRC will work with stakeholders, including recruitment agencies and Umbrella companies over the coming months to ensure they are ready for the changes in April 2026.
Next steps
HMRC’s roadmap is clear that legislation which shifts liability for tax shortfalls to recruitment agencies will come into effect in April 2026. Therefore, there isn’t much time to prepare for these changes. We recommend that you take the following steps now as we interpret the draft legislation:
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Revisit your current due diligence policies, controls and procedures (“PCPs”).
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Review and map your supply chain.
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Consolidate your Preferred Supplier List (PSL) to only your most trusted and stable partners.
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Review contractual indemnities weighted against the financial strength of your PSL partners.
As always, our aim is to make the changing legislative landscape as seamless as possible for you. So, if you have any questions or need a helping hand, don’t hesitate to reach out to your Key Account Director.
