Mind the JSL compliance gap — to avoid faith in your umbrella/agency contractor supply chain folding

With Joint and Several Liability (JSL) for umbrella companies now in force, the conversation around compliance has shifted. Not in guidance notes or policy updates, but in how contractors' recruitment agencies, and Managed Service Providers (MSPs), are actually operating day-to-day.

These are shifts that astute umbrella company contractors should be alive to.

How has Joint & Several Liability changed agency/MSP-umbrella dialogues?

The JSL questions now being asked by both agencies and MSPs are now more direct. Vague answers from umbrella companies are being challenged.

And the gap between what an umbrella company (often 'a provider' here onwards) says, and what they can show, now matters in a way that it didn't before April 6th 2026, writes Holly Spiers, a director at SafeRec.

What is the JSL compliance gap?

This 'JSL compliance gap' — the gap between what's claimed by a provider and what's demonstrable by that provider — is no longer theoretical.

It's showing up in Preferred Supplier Lists (PSL) reviews, onboarding checks, and internal risk discussions.

Legal, operational, and tax compliance simply cannot be accepted at face value anymore.

Instead, those are all things that contractor recruitment agencies (and other supply chain parties) expect to see — and if it cannot be seen, it becomes a risk.

In this article, which is exclusively for ContractorUK, I will share FOUR JSL INSIGHTS from our talks with thousands of agencies and dozens of MSPs over the last six months, which will inform the actions of these key contractor supply chain parties for twice as long — the course of the 2026-27 tax year.

1. It's OUT with assumptions, IN with evidence…

The most important shift caused by HMRC's April 6th JSL rules is actually the simplest.

Compliance is moving from being declared to being demonstrated.

Therefore, merely asserting "Payroll Is Correct" is no longer enough.

A real-time audit of tax calculations and evidence that the correct taxes are paid to HMRC, have become paramount.

How should umbrella companies feel about agencies asking JSL questions?

Umbrella companies shouldn't take it personally.

This is not about mistrust.

It is about addressing the JSL compliance gap because, with no statutory excuse permitted by the 'Chapter 11' ITEPA 2003 rules, agencies and MSPs don't have a choice.

Let's just explain this JSL compliance gap a bit more.

Are contractor supply chain issues usually obvious failures?

In any supply chain, issues or problems rarely appear as obvious failures.

They typically sit between intention and execution. Between what is reported and what is actually happening.

And if you cannot access the details, you cannot see this potential JSL compliance gap.

Technology has made this level of visibility possible for some time. What has changed since April 6th is expectation. Access to real-time auditing evidence is starting to be treated as standard.

Under umbrella company JSL rules, what are agencies moving away from?

As our CEO, Seb Sauca, put it on Thursday, April 9th, 2026, in our social media post: "Agencies are moving away from relying on trust alone, and towards real-time visibility and ongoing monitoring. Less assumption. More evidence."

2. Preferred Supplier Lists (PSLs) are becoming much more dynamic

PSLs used to be relatively static.

Once a provider was approved, they stayed. Reviews of the umbrella company happened, but often after the point where they would have picked up a real issue.

Preferred Supplier Lists for 2026-27 are becoming dynamic. Approval to join the PSL used to be the end of the process, whereas now it is where ongoing scrutiny begins.

What 4 things are recruiters asking umbrellas to do due to the JSL rules?

We are witnessing agencies and MSPs creating more thorough and complete compliance frameworks, asking providers (umbrella companies) to:

1. Maintain their position via real-time audit
2. Demonstrate compliance
3. Supplement their periodic audits
4. Set up ongoing visibility.

With JSL now enforceable by HMRC, contractor recruitment agencies are moving closer to real-time assurance. Continuous reporting. Ongoing monitoring. The ability to check when needed.

After all, a PSL that is not actively monitored is not really controlling risk.

3. Contractor recruitment agencies are under the same JSL scrutiny

Historically in the temporary labour market, the focus on PAYE compliance has largely been on umbrella companies.

But that boundary is starting to blur.

Not talked about nearly enough, agencies operating PAYE models are now starting to be asked the same questions that they have historically asked others.

Not what the policy says, but how it works — in practice.

What are PAYE agencies being asked to show to their supply chain partners?

Broadly, it's three 'how' things when PAYE agencies are asked to open up:

1. How tax is calculated.
2. How tax is reported.
3. How tax is paid.

This is where the behavioural impact of HMRC's Joint and Several Liability becomes clearer.

JSL does not force operational change directly. Rather, the Revenue's rules increase the exposure of working with non-compliant PAYE operators. That is what changes behaviour. Due diligence becomes something you do continuously. It becomes part of how you operate, not something revisited once a year.

And once that expectation exists externally, it is difficult not to apply it internally.

If you expect transparency from your supply chain, you need to be able to offer the same level of clarity yourself.

4. A more holistic approach to umbrella company compliance

Tax remains at the centre of compliance. It is where most of the risk has historically sat, and where scrutiny is now the highest as 2026-27 gets underway.

But other elements alongside real-time tax audits need to be considered to create a complete compliance framework.

With JSL now applicable, agencies are leaning into tax auditing visibility more than ever.

And alongside that, there is a growing need to understand the stability of the businesses that they rely on.

Therefore, we're seeing agencies request more visibility on (and access to) business intelligence and credit reporting tools.

Contractors would be wrong to suspect this is compliance being expanded for the sake of it. It's just that what's changing, now that JSL is here, is the expectation that this sits within a more complete, controlled framework.

The takeaway

These four realities in the run-up to JSL (which are continuing to play out now that the framework has finally been introduced) did not appear overnight. Aware that HMRC will want to swoop on any JSL compliance gap, parts of the market have been moving in the direction of this quartet for quite some time.

What last Monday (April 6th) represented was the point where expectation caught up with that reality.

So as of Q2 2026, there is now a clear move towards transparency, auditability, and ongoing verification.

Finally, with JSL now live, what does each supply chain party want in 2026/27?

Agencies want to see the details. MSPs want ongoing assurance. End clients want to know how risk is being actively managed.

JSL reinforces those directions by increasing the consequences of getting it wrong. But the deeper shift is behavioural.

For agencies, Joint & Several Liability changes what a strong temporary labour supply chain looks like. It is no longer one that appears compliant. It is one that can be proven to be compliant — at any point, without friction.

Compliance with JSL moved out of documents on April 6th and into data. If you cannot access, interrogate, and explain the data, then you are still relying on assumption. And assumption is exactly where most of the risk has always been hiding.