From April 2026, Joint and Several Liability (JSL) will change how labour supply chains are viewed from a tax and compliance perspective.

It is important to say at the outset that JSL is not the same as IR35. They are separate rules, although they can both affect the same supply chain. Put simply, IR35 determines how a worker should be taxed. If an assignment falls inside IR35, PAYE should apply and JSL is about who HMRC can go after if that PAYE has not been paid correctly.

Until now, many businesses have worked on the basis that the main responsibility sat with the umbrella company and from April 2026, that will be much harder to rely on. If the umbrella has not paid the right tax, HMRC may be able to recover unpaid PAYE from other parties in the chain too, including the lead agency, MSP or end client.

That is a significant shift. The conversation is no longer just about whether checks have been done; it is about whether there is clear evidence that PAYE has actually been operated correctly.

Why does that matter? Because under JSL:

  • you may still face liability even if you were not directly at fault
  • due diligence alone may not protect you from that liability
  • HMRC may pursue the full unpaid amount, not just part of it

That creates a very real commercial risk. If an umbrella company is non-compliant or financially weak, others in the chain could be left dealing with tax exposure, reputational damage and difficult conversations with clients.

In practice, the main risks tend to show up in a few familiar areas. One is expenses that have been treated incorrectly or paid without proper checks, another is financial weakness within the umbrella, especially where liabilities to HMRC build up in the background and there is also the ongoing risk of non-compliant payroll models, including mini-umbrellas, loan arrangements, offshore structures or incorrect CIS treatment. On top of that, many MSPs and clients still do not have enough visibility over what is really happening further down the chain.

That is why traditional due diligence on its own may no longer be enough. Accreditation, certifications, and periodic reviews still matter, but they do not necessarily answer the key question HMRC is likely to ask; can you show that PAYE was calculated correctly and paid properly? That is the real challenge under JSL. It is not just about whether an umbrella appears compliant on paper, it is about whether there is a clear and reliable audit trail behind every payslip.

As a result, more businesses are looking at compliance technology that gives them stronger visibility. That includes real-time audit and verification platforms such as SafeRec, which are designed to check payslips and payroll data as part of ongoing monitoring rather than a once-a-year review.

Other solutions are emerging too, including tools such as VeriPaye, payroll software integrations that give greater access to RTI and payslip data, and internal compliance frameworks backed by audit technology.

The direction is clear; businesses want better evidence, better visibility and fewer blind spots across the supply chain.

Ultimately, JSL marks a move away from the idea that risk can simply be passed down the chain. For agencies, MSPs and end clients, it means stronger oversight, better information and closer working relationships with trusted partners.

If you would like to discuss JSL, IR35 or compliant Interim recruitment solutions, contact Tony Goldsby, Director at Lord Interim, at tgoldsby@lord.co.uk.