JSL Regulations Explained

Important Update: April 2026

From 6th April 2026, HMRC is introducing stricter enforcement of PAYE risk in umbrella company supply chains. Agencies and umbrellas must ensure full compliance or face joint liability for unpaid taxes.

What is Joint and Several Liability (JSL)?

Joint and Several Liability (JSL) is a legal principle that makes agencies and umbrella companies jointly responsible for ensuring that PAYE (Pay As You Earn) taxes and National Insurance contributions are correctly calculated, deducted, and paid to HMRC.

Under JSL, if an umbrella company fails to pay the correct PAYE, both the umbrella company AND the recruitment agency can be held liable for the unpaid tax.

Why Was JSL Introduced?

JSL regulations were introduced to:

Combat tax avoidance schemes in the umbrella sector
Protect workers from non-compliant umbrella companies
Ensure agencies conduct proper due diligence
Increase accountability in the temporary worker supply chain
Prevent revenue loss to HMRC

April 2026 Regulation Changes

What's Changing?

From 6th April 2026, HMRC is implementing:

Enhanced Enforcement: More rigorous compliance checks on umbrella companies
Agency Responsibility: Agencies must conduct enhanced due diligence before using umbrella companies
Liability Transfers: Faster transfer of liability for PAYE errors
Financial Penalties: Increased penalties for non-compliance
Accreditation Focus: Greater emphasis on industry accreditation

Impact on Agencies

Recruitment agencies must now:

Conduct comprehensive due diligence on all umbrella providers
Verify PAYE compliance and payment records
Check for tax avoidance scheme involvement
Obtain evidence of RTI submissions to HMRC
Review umbrella fee structures for compliance
Maintain ongoing monitoring of umbrella performance

How Apex Ensures JSL Compliance

Full PAYE Compliance

Apex Compliance Solutions operates complete PAYE compliance:

✓ Real-Time Information (RTI) submissions to HMRC every payment run
✓ Accurate calculation of Income Tax and National Insurance
✓ Full payment of all PAYE liabilities to HMRC
✓ Transparent fee structure with no hidden costs
✓ No tax avoidance or loan schemes
✓ Regular HMRC compliance audits

Transparent Operations

Detailed payslips showing all deductions
Clear breakdown of employer and employee NI
Visible fee structure with no hidden charges
Open communication with agencies and workers
Evidence of PAYE payments available on request

Your Protection as a Contractor

When you work through Apex Compliance Solutions, you are protected because:

We operate fully compliant PAYE payroll
All taxes are correctly calculated and paid to HMRC
You receive accurate P60s and P45s
Your tax obligations are properly met
No risk of future tax liabilities or investigations

Red Flags: Non-Compliant Umbrellas

Be cautious of umbrella companies that:

❌ Promise take-home pay of 80% or more of gross
❌ Offer "loan" or "salary advance" schemes
❌ Operate offshore structures (Jersey, Isle of Man)
❌ Cannot provide clear payslip breakdowns
❌ Charge excessive or hidden fees
❌ Promise tax-free or minimal deduction payments

Agency Due Diligence Checklist

Agencies working with Apex Compliance can verify our compliance through:

✓ Company registration and trading history verification
✓ Evidence of PAYE scheme registration with HMRC
✓ Sample payslips showing correct PAYE deductions
✓ Proof of RTI submissions
✓ Professional Indemnity Insurance certificates
✓ Clear fee structure documentation

HMRC Resources

For more information on JSL and umbrella company compliance:

Questions About JSL?

Email: [email protected]
Phone: 0330 133 7733
Address: Aura Business Centre, Manners Road, Newark, Nottinghamshire, NG24 1BS