Joint and Several Liability: What UK Contractors Need to Know
Finance Bill 2024: Joint and Several Liability in Focus
The recently published Finance Bill has reaffirmed the government’s commitment to tackling tax non-compliance within the supply chain. For UK contractors, agencies, hirers, and particularly umbrella providers, the headline issue remains Joint and Several Liability (JSL). Despite speculation, there are no significant changes to the core JSL provisions first outlined in July: the regime remains strict, far-reaching, and will require proactive compliance and risk management from all parties.
Key Provisions: No Surprises, Clear Deadlines
The Finance Bill makes it clear that JSL applies to all payments made on or after 6 April 2026, regardless of:
When the underlying contract was signed
When the work was performed
This forward-looking application means historical arrangements are not grandfathered in. Every payment after the cut-off date falls under this regime, with no exceptions for contract age or accrued rights.
Strict Liability: No Room for Error
JSL is a strict liability regime. In practical terms, this means:
If HMRC has not received the correct tax, every party in the payment chain can be held liable—regardless of good faith, third-party accreditations, or diligent payslip checks.
Umbrella providers, agencies, and hirers must understand that assurances or certifications do not insulate them from HMRC claims. The liability is absolute and triggered by non-payment alone.
No One-Size-Fits-All Compliance Model
A uniform compliance approach will not suffice. The Finance Bill acknowledges the diversity of supply chains and allows for multiple, overlapping risk management models, including:
Enhanced traditional umbrella arrangements: Maintaining existing structures with additional due diligence and audit controls.
PAYE calculation/reporting by umbrellas, direct HMRC payment by agencies/hirers: Segregating responsibilities to reduce risk exposure.
Independent Compliance Service Providers: Engaging third parties to conduct real-time monitoring and reporting.
Agencies and hirers may adopt different models at different times, or even concurrently for various clients. This demands flexibility and agility from umbrella providers, who must adapt to evolving risk appetites and compliance demands in real time.
What Should Umbrella Providers Do Next?
Review and update contracts: Adopt the new Hire On terms as soon as possible.
Enhance compliance systems: Invest in real-time audit and reporting tools.
Engage with agencies and hirers: Open dialogues to understand their preferred risk management models.
Prepare for flexibility: Structure operations to accommodate multiple compliance strategies simultaneously.
“The introduction of Joint and Several Liability is a watershed moment for the sector. Proactive adaptation is not just an advantage—it is a necessity.”
The Path Forward
With the strict JSL regime now confirmed and imminent, umbrella providers face an urgent need to modernise their contractual and operational frameworks.
Those who move swiftly and decisively will not only protect their own interests but set industry standards for responsible, compliant contracting in the years ahead.
