Umbrella Compliance and the importance of a reputable PSL
Why We Are Reducing Our Umbrella Company Preferred Supplier List from 6 April 2026
From 6 April, changes to Joint and Several Liability (JSL) in the temporary labour supply chain will significantly alter how compliance risk is allocated across recruitment agencies, end clients, and umbrella companies.
As a responsible recruitment business, we are updating our approach.
This includes reducing the number of umbrella companies on our Preferred Supplier List (PSL).
We want to explain why.
What Is Changing on 6 April?
Under the updated Joint and Several Liability rules, liability for unpaid tax and non-compliance within labour supply chains will be broadened.
In practical terms, this means:
- If an umbrella company fails to meet its PAYE or other tax obligations
- Or if non-compliant practices are identified
- Liability can extend beyond the umbrella company itself
Recruitment agencies and potentially end clients may also be held accountable.
This represents a significant shift in risk exposure across the supply chain.
Why This Matters
Historically, many agencies (including ourselves) have operated broad PSLs to provide contractors with choice and flexibility.
However, the new framework increases the legal, financial and reputational risks associated with working with umbrella companies that do not meet the highest compliance standards.
In short:
We cannot simply rely on declarations — we must rely on demonstrable, provable compliance.
The consequences of getting this wrong include:
- Financial liability
- HMRC investigation
- Reputational damage
- Disruption to contractor payments
That is not a risk we are prepared to pass on to our contractors or clients.
Why We Are Reducing Our PSL
Reducing the size of our Preferred Supplier List allows us to:
- Conduct Deeper Due Diligence
With a smaller number of umbrellas, we can perform more frequent and more robust compliance audits.
- Strengthen Ongoing Monitoring
Compliance is not a one-time check. We need ongoing transparency around PAYE processes, tax payments, and governance standards.
- Protect Contractors
Non-compliant umbrella arrangements can expose contractors to unexpected tax bills and investigations. We want to ensure those operating through our PSL are protected as far as reasonably possible.
- Protect Our Clients
End clients are increasingly sensitive to supply chain risk. A tightly controlled PSL reduces exposure for everyone involved.
What This Means for Contractors
We understand that umbrella choice matters.
Our decision is not about restricting flexibility unnecessarily. It is about:
- Ensuring compliant PAYE operation
- Minimising risk under new JSL rules
- Providing a safer, more secure payroll solution
All umbrella companies remaining on our PSL will have undergone enhanced compliance review.
If you are currently using an umbrella not on our updated list, our team will contact you to discuss options and ensure a smooth transition where required.
Our Commitment
The labour supply market is evolving.
The changes taking effect on 6 April reinforce something we have always believed:
Compliance is not optional — it is foundational.
By refining our PSL, we are taking proactive steps to:
- Safeguard contractors
- Protect our clients
- Maintain the highest professional standards
If you have any questions about the upcoming changes or how they affect you, please contact us.
We are here to help
