Joint and Several Liability Will Strengthen Not Replace HMRC’s List of Named Tax Avoidance Schemes
From April 2026, new Joint and Several Liability (JSL) rules will come into force for umbrella companies. These rules are designed to give HMRC stronger powers to recover unpaid PAYE and NICs. However, experts confirm that JSL will not replace HMRC’s list of named tax avoidance schemes, promoters, enablers and suppliers. Instead, the two will operate together.
What is JSL?
Under current rules, if an umbrella company fails to meet its PAYE and NICs obligations, HMRC can pursue the umbrella directly. In practice, many non-compliant umbrellas have dissolved or “phoenix’d,” leaving liabilities unpaid.
JSL changes that. From April 2026, if an umbrella company fails to meet its tax obligations, HMRC can also hold agencies and, in some cases, end clients jointly responsible for the unpaid amounts.
For compliant umbrellas, JSL makes no difference. The change is primarily aimed at ensuring that tax shortfalls cannot simply be avoided when a non-compliant operator disappears.
Why the list of named schemes remains important
Since 2010, HMRC’s published list of named tax avoidance schemes has acted as a public warning. Its purpose is to deter engagement with high-risk arrangements and to encourage due diligence across the labour supply chain.
Legal specialists confirm that the introduction of JSL will not render this list redundant. Instead, the two measures will complement each other:
The list warns contractors, agencies, and clients about operators and schemes already identified as high-risk.
JSL ensures that HMRC has a clear route to recover tax where an umbrella fails to meet its obligations.
Potential for agencies and end clients to be named
While the majority of entries on HMRC’s list have so far been umbrella companies or disguised remuneration scheme operators, the legislation is not limited to these. Agencies and even end clients could be included on the list if HMRC concludes they have promoted or enabled tax avoidance.
This is a significant development. Beyond financial liability under JSL, businesses higher up the supply chain may also face reputational consequences if they are publicly named. The clear message is that compliance is now a shared responsibility across the entire labour supply chain.
Implications for contractors and agencies
For contractors, the message remains straightforward: reputable umbrella companies are safe to use, and the introduction of JSL should encourage agencies and clients to be even more rigorous in their checks. However, strong due diligence is still essential. Being absent from HMRC’s list does not equate to approval, and HMRC retains the right to challenge any arrangement it considers to be avoidance.
For agencies and clients, the risk profile changes more significantly. JSL extends liability to them directly, while the possibility of being named on HMRC’s list adds a reputational dimension. Both financial and brand risks now sit alongside compliance obligations.
Recent updates to HMRC’s list
In recent months, HMRC has added several companies to the list, including AIT Umbrella Ltd, PAY APL Ltd, Real Payments Ltd, Regis Ltd, and Endeavour Services Ltd. Most were found to be operating disguised remuneration schemes while presenting themselves as umbrella companies.
Summary
The upcoming JSL rules will not replace HMRC’s list of named tax avoidance schemes — they will enhance it. Together, they represent a two-part approach:
Deterrence, by publicly identifying avoidance schemes and enablers.
Recovery, by extending liability across the supply chain.
For contractors, this should provide greater protection and transparency. For agencies and end clients, it underlines the need for robust due diligence and a cautious approach to selecting supply chain partners.
