Now it’s finally here, how is HMRC Joint & Several Liability risk being managed, and is payment control the holy grail?

As even the busiest umbrella company contractors won’t have missed, Joint and Several Liability (JSL) came into force on April 6th 2026, reshaping how HMRC risk is managed across contractor supply chains.

What is the key aspect of JSL rules for contractors?

While the new JSL legislation has raised a few understandable concerns, the main ‘JSL’ takeaway for umbrella contractors is clear — you are not personally liable for unpaid tax elsewhere in the chain.

So JSL is not about HMRC targeting workers (for once, at least), writes the CEO of Professional Passport, Crawford Temple, who has specialised in payment intermediary compliance for 19 years.

What are the new umbrella company rules of 2026 really about?

Rather, Joint & Several Liability is really about ensuring that the businesses responsible for handling money — agencies, umbrella companies, and intermediaries such as Managed Service Providers — are accountable for ensuring tax is paid correctly to the tax office.

However, what JSL does introduce is a new way of thinking about risk.

What does Joint & Several Liability create across a supply chain?

Instead of the binary ‘compliant or non-compliant’ view of yesteryear, JSL creates a now-in-force, future risk scale across the supply chain.

What do I mean by ‘risk scale’?

Well, as we see it, the more that a model depends on multiple parties to pass funds along correctly, the higher the risk. The more control there is, particularly over how taxes are calculated and paid, the lower that risk becomes.

Can the JSL-HMRC risk ever be neutralised?

At its most effective point, if taxes are paid directly to HMRC and paid correctly to HMRC, the ‘JSL risk’ is effectively neutralised.

This is why the conversation in the temporary labour market is already changing, even if JSL’s April 6th introduction has not been in our rearview mirror for even a single month.

The key point is that JSL means it’s no longer just about ‘being compliant’ on paper; it’s about eliminating the possibility of liability altogether by controlling the payment. That’s the ultimate way to avoid sleepless nights now that JSL is enforceable by HMRC. In short, payment control is the holy grail.

Why is payment control key to managing HMRC JSL risks?

Under JSL (Joint & Several Liability), also known as the ‘Chapter 11 ITEPA rules,’ HMRC liability is triggered by unpaid tax. That means the single most important factor is not process, policy, or assurance but whether the correct amount of tax has actually been paid.

For recruiters and other supply chain parties, this makes the control of payments critical.

Where contractor recruitment agencies ensure tax is calculated, separated, and paid directly to HMRC, the risk of JSL is neutralised — at source.

Where they do not take payment control in this three-fold way — we further deduce — agencies remain exposed.

Is ‘JSL payment control’ relevant to contractors?

For contractors, this distinction matters because it shapes the stability of the supply chain you are part of.

A model built on direct control of payments is inherently lower risk than one relying on multiple parties to pass funds along correctly.

With JSL now live, can the wider compliance picture be ignored?

While JSL is about tax liability, it does not sit in isolation.

The broader regulatory environment for temporary labour, particularly with the Fair Work Agency (FWA) now open, adds another layer.

What powers does the new Fair Work Agency have?

Operational since April 7th 2026, the FWA’s powers will see it issue penalties for non-compliant operational practices.

On the surface, this is separate from JSL. However, in reality, the two are connected.

How are JSL and Fair Work Agency fines/enforcement connected?

If an umbrella company or intermediary is subjected to FWA’s financial penalties, or faces operational disruption due to non-compliance, their ability to meet tax obligations could be hit.

And if tax is not paid, that is where JSL risk re-enters the chain.

So, while JSL risk itself can be neutralised through payment control, underpinning compliance still matters — because it affects the financial health and reliability of those responsible for making those payments.

Do some umbrella companies fall into high-risk categories for JSL?

Not all providers operate in the same way, and JSL is beginning to expose those differences.

Some umbrella companies have historically relied on holding funds — effectively using money owed to HMRC for their own cashflow purposes. In a stable or growing market, this may not immediately surface as an issue.

But under JSL, effective since 2026/27, this behaviour places these umbrellas into a higher risk category.

Are some providers anti-direct and immediate payment of tax?

As the market shifts, particularly if economic conditions worsen, that balance would become more fragile. If margins tighten or cashflow is squeezed, the ability to meet tax liabilities can be impacted, bringing JSL risk sharply into focus.

This is one reason why parts of the UK umbrella company market are resistant to models that advocate direct and immediate payment of tax, as those models remove access to that cashflow.

Are recruitment agencies exerting pressure within the supply chain?

At the same time, commercial pressures within the contractor recruitment sector can add to the risk.

Agencies are often operating in highly competitive environments and may push for tighter margins or extended payment terms. In some cases, these agency demands can place an umbrella under financial strain.

When terms become ‘uncommercial,’ the weakest point in the chain is typically where problems emerge. If that strain affects an umbrella’s ability to meet its obligations, the consequences do not stay isolated — they can trigger JSL exposure across the chain.

This is why I’m advising that payment control is not just a compliance decision; it is a commercial risk decision.

What does Joint & Several Liability change for contractors?

For contractors, JSL does not create personal liability, but it does change the dynamics of the market you operate in.

This new ‘umbrella company’ legislation could also result in restrictions being imposed on which umbrella you can work through, and yes, some contractors already are being forced to change providers.

Generally speaking, a contractor is unlikely to have a choice.

As a result, the typical contractor will have to select a provider that the agency or client has deemed acceptable in their supply chain.

What’s in store for umbrella company contractors in 2026/27?

Contractors and other ContractorUK readers are also more likely to see in 2026/27:

• Agencies taking greater control over payment processes.
• Increased scrutiny of umbrella companies.
• A shift towards models that prioritise certainty over flexibility.

Ultimately, these JSL-led changes are designed to reduce risk at the top of the chain, which in turn creates a more stable environment for you — the umbrella company worker.

The takeaway

Despite what contractors are used to from HMRC, JSL is not about adding another layer of compliance — but it is about removing risk.

The closer a supply chain gets to direct, controlled payment of tax, the closer it gets to neutralising JSL entirely.

For contractors, that should be reassuring. After all, you are not the party carrying the HMRC liability. Instead, the focus with JSL is on ensuring that those who control the money take responsibility for where it goes.

And in a market where both regulatory scrutiny and financial pressures are increasing, that shift towards control is not just sensible, it’s necessary.