Proving Umbrella Compliance Without Accreditation
PSL pressure meets accreditation bottlenecks
Agencies are tightening preferred supplier lists ahead of the April 6 2026 PAYE joint and several liability rules. Some now demand accreditation even as bodies pause new intakes. That creates unfair exclusion despite the fact accreditation is not compliance. What the law and HMRC guidance actually require is correct operation of PAYE and evidence that it is being operated correctly throughout the labour supply chain.
What the law really asks for
From April 2026, HMRC expects umbrellas to run PAYE correctly and to provide the information agencies and end clients need to check it. If an umbrella fails, risk can flow to others in the chain. The practical requirement is proportionate due diligence backed by documented controls, not possession of a badge.
The requirement is evidence and controls - not a badge.
Accreditation is optional evidence, not a legal requirement
HMRC’s labour supply chain due diligence principles treat accreditation as one check among many. It can be useful independent verification, but it is not mandated by law. Agencies should keep clear records of proportionate checks. A robust evidence pack that allows verification of PAYE, NIC and RTI can meet the same assurance goal as accreditation and is often stronger because it is specific, current and testable.
The compliance evidence pack
An umbrella can provide the following documents and artefacts on request to demonstrate real-time PAYE compliance and sound governance.
| Item | What it proves | How to verify |
|---|---|---|
| Companies House number, legal name, registered office, PSCs and directors | Corporate identity and director transparency | Match against Companies House register and confirm active status |
| VAT registration certificate and VAT number | Correct VAT status and identity alignment | Cross-check name, address and VAT number on HMRC VAT checker |
| Employer PAYE reference and accounts office reference shown on payslips | Employer of record and PAYE routing | Check format, consistency across payslips and with RTI receipts |
| Sample anonymised payslips for recent tax months | PAYE, NIC, pension and holiday pay treatment | Confirm tax basis, deductions, NMW compliance and correct pay period |
| Gross-to-net reconciliation statements per pay run | Traceability from assignment income to worker pay and deductions | Reconcile to remittance advice and bank statements where permitted |
| Confirmation that net pay equals payslip net and is paid by the umbrella only | No third-party diversion or mini umbrella risk | Evidence from payment files and bank confirmations |
| RTI submission evidence and HMRC receipts | On-time reporting under RTI | Match FPS/EPS receipts to pay dates and totals |
| Proof of PAYE and NIC payments to HMRC with timelines | Taxes remitted on schedule | Payment references aligned to RTI and control accounts |
| Employer’s liability insurance certificate | Statutory insurance in force | Current certificate covering all employees and activities |
| Right to work process map and sample records | Legal eligibility controls | Documented checks, storage and review cadence |
| Pension auto enrolment policy and remittance evidence | AE compliance and timely contributions | Provider confirmations and contribution schedules |
| Holiday pay, leaver and starter policies | Treatment aligned to Working Time and payroll rules | Version-controlled policies and examples |
| Expenses policy aligned to travel and subsistence tax rules | No disguised remuneration via expenses | Clear eligibility criteria and approval workflow |
| Worker grievance policy and payslip access for current and former workers | Worker protection and transparency | Portal screenshots and comms templates |
Short standout line: Proof beats promise. Provide it, date it, and file it.
Contract clauses that replace badge reliance
Where accreditation access is unavailable, contracts can embed the right behaviours and information flows. Model clauses for agency-umbrella and end-client supplier terms should include:
Warranties that all worker pay is taxable earnings subject to PAYE and NIC, with no loans, advances schemes or third-party diversion.
Covenant to operate RTI correctly and pay HMRC on time for all liabilities arising.
Covenant to provide the compliance evidence pack and any reasonable additional evidence within defined timeframes, for example 5 working days.
Audit rights enabling process reviews and sampling of payslips, gross-to-net reconciliations, RTI receipts, pension remittance evidence and insurance certificates.
Obligation to notify any outsourcing of employer functions and to obtain prior written consent before changing the employing entity.
Indemnity for losses arising from proven non-compliance, proportionate to causation and capped where appropriate.
Termination right for material breach, with a defined cure period for administrative errors that do not involve tax loss or worker detriment.
Data protection and confidentiality commitments to lawfully share evidence while protecting personal data.
Replace badge reliance with testable promises, evidence delivery timelines and audit rights.
Worker protection obligations still apply
The Conduct of Employment Agencies and Employment Businesses Regulations remain in force. Key Information Documents support transparency on pay, fees and deductions. Umbrellas should give agencies the written information needed to complete and maintain accurate KIDs for each engagement. Agency Workers Regulations continue to protect equal treatment rights. Compliance can be evidenced through clear policies, assignment data and pay comparisons, rather than via accreditation, and should be available for inspection.
A practical workflow for agencies
Below is a proportionate, repeatable due diligence process drawn from HMRC expectations.
Map the labour supply chain and identify the employer of record and any intermediaries.
Verify identity, VAT and Companies House details; confirm directors and PSCs.
Obtain worker payslips and gross-to-net reconciliations directly from workers where possible, with consent.
Review for unexplained deductions, net pay anomalies and minimum wage risk; confirm employer PAYE references.
Check RTI receipts, PAYE payment timelines, insurance and pension remittances.
Repeat checks at set intervals, such as quarterly, and store records with dates and reviewer names.
Next steps for agencies and end clients:
Add the model clauses to your standard terms this week.
Request the compliance evidence pack on onboarding and quarterly thereafter.
Record every check, finding and escalation in a central register.
One-page message to forward
We understand your joint and several liability risk from April 2026. We will provide a complete compliance evidence pack within agreed timelines, accept audit rights, and contractually warrant correct PAYE operation and disclosure. Accreditation may be pursued when available, but lack of intake does not prevent evidence-based compliance today.
Contractor News view
Contractor News recognises the market pressure to reduce risk ahead of April 2026. Accreditation can be helpful, but it is not the law and does not provide protection. Clear contracts, routine evidence and auditable controls provide stronger assurance than a static badge. Agencies, end clients and umbrellas that adopt this workflow should improve trust, speed onboarding and protect workers while meeting HMRC expectations.
