Without Tracking the Trail, Protection Simply Fails

The Coming Storm: Why UK Contractors Must Wake Up

Brace yourself, UK contractors and agency leaders. The government is about to unleash a tax compliance regime that will leave no room for error, ignorance, or apathy. From April 2026, the landscape changes forever. If you can't prove PAYE has been paid—directly, with an ironclad audit trail—you could be forced to pay it all again. Even if you already paid it to your umbrella. Even if the debt isn't yours.

This isn't a hypothetical. It's a live grenade with the pin already pulled.

Joint and Several Liability? No—This Is Collective Liability

The government's new Joint and Several Liability (JSL) legislation, tucked into July's Finance Bill, claims to target non-compliance in the umbrella industry. But let's call it what it really is: Collective Liability. Every contractor, agency, and hirer using an umbrella is being lined up to underwrite the tax liabilities of others in the supply chain—potentially paying their own workers' PAYE twice.

Here's how it plays out:

• If you can't prove workers’ PAYE was paid to HMRC under the umbrella’s reference, you are automatically exposed.
• HMRC can and will chase you for liabilities, even if you acted in good faith, even if you already paid the umbrella.
• Verification tools, accreditations, payslip checks? Nice for due diligence. Useless for protection.

Crawford Temple, CEO of Professional Passport, said it bluntly:

“The reality of JSL is that it may create Collective Liability. Every agency and hirer using an umbrella and not paying the PAYE in respect of its own workers directly to HMRC will find itself underwriting everyone else’s risk. Current systems offer no protection—at best, they provide an element of risk profiling. The only way to protect your business is to pay your workers’ PAYE directly to HMRC, correctly quoting the PAYE reference of the umbrella, and thus maintain a clear and detailed audit trail. Without this, you are working on a ‘trust me, it’s alright’ basis, and trust is not a defence against HMRC.”

How the System Fails You Now

The status quo is a minefield:

1. End client pays the agency

2. Agency pays an uplifted rate to the umbrella

3. Umbrella calculates pay, sends net wages to the worker, and is supposed to pay PAYE and VAT to HMRC

But unless every agency is telling HMRC what’s been paid, there’s no way to verify with certainty. Even the best RTI (Real Time Information) checks and payroll accreditations provide no shield. If a shortfall arises, HMRC doesn’t care why. It will split the debt across all agencies based on the number of workers and their unpaid PAYE.

Worse still, HMRC won’t even notify you when they open an enquiry into an umbrella provider. You could be in the firing line for months, racking up liabilities you didn’t know existed, while indemnities become worthless.

Scenarios That Will Leave You Exposed

Don’t think this is just about criminal umbrellas. Errors in payroll software, tribunal outcomes, incorrect holiday pay, or even financial distress anywhere along the chain can trigger a shortfall. If you can’t prove—directly and unequivocally—that the PAYE for your workers reached HMRC, you are a target.

Scenario	Are you protected?
Paid umbrella, but not HMRC	NO
Have payslips and RTI checks	NO
Used payroll accreditations	NO
Direct payment to HMRC w/ref	YES

The ONLY Defence: Direct Payment and Audit Trail

Let’s cut through the noise. There is only one way to stop HMRC from bleeding your business dry for others’ tax failings: Pay your workers’ PAYE directly to HMRC, under the umbrella’s PAYE reference, and keep a rock-solid audit trail.

Professional Passport’s 3-Step Path to Protection

Professional Passport is spearheading a new process for agencies who are serious about protection:

1. Upload payment data through a secure system.

2. Transfer net pay and VAT to the umbrella.

3. Pay PAYE directly to HMRC, under the umbrella’s reference.

This two-payment process, with unique reporting and validation, creates a watertight shield. Agencies can demonstrate compliance, ring-fence their liability, and finally sleep at night.

What Should UK Contractors and Agencies Do—Right Now?

• Review your supply chain. If you’re using an umbrella, demand evidence of PAYE payments. Don’t accept ‘trust me’—insist on verifiable, HMRC-matched audit trails.
• Adopt new processes. Move to a system where you pay PAYE directly to HMRC. Relying on others is a sucker’s bet now.
• Educate your teams and clients. The era of plausible deniability is over. Everyone in the chain must know what’s at stake.
• Partner with compliance leaders. If you’re not already working with a provider offering direct-to-HMRC solutions, start the conversation today.

False Comforts: Why Accreditations and Checks Are Not Enough

Let’s be clear: payroll software checks, umbrella accreditations, RTI verifications—all can be gamed or fail to spot a shortfall. When HMRC comes knocking, they won’t care about your certificates. They care about one thing: Was the PAYE for these workers paid to us, or not?

The Bottom Line: Act or Get Burned

This is a battle for your business’s survival. Do nothing and you’ll pay for the sins of others. Act boldly—demand transparency, take control of PAYE flows, and build an audit trail that will stand up to the most ruthless investigation.

The only safe position is outside the liability chain. Get your audit trail in order. Now.

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Next Steps

• Audit your current umbrella arrangements. Can you prove PAYE was paid to HMRC for every worker?
• Speak to a compliance expert about implementing a direct-to-HMRC process.
• Train your staff: risk ignorance is not a defence.

Don’t wait for the 2026 deadline. The time to act is now.