Payroll for recruitment agencies now liable for umbrella PAYE
Since 6 April 2026, if an umbrella company fails to pay over the PAYE and Class 1 NIC due on a worker's pay, the agency that supplied the worker to the end client is jointly and severally liable for the shortfall. The umbrella keeps the primary duty — but HMRC does not have to chase it first, and can pursue the agency for the full amount irrespective of fault. Where there is no UK-based agency in the chain, the liability falls on the end client instead.
Start a free trial Talk to usWhat you get
Live PAYE liability exposure
Your exposure per umbrella across 30, 60 and 90-day windows — so you know your risk before HMRC does.
FCSA status monitoring
An automated daily check against the FCSA member list. A lapse is detected in hours and the umbrella is suspended from your panel automatically.
Mini-umbrella fraud scoring
Each umbrella is scored against seven HMRC mini-umbrella fraud indicators. A score of four or above triggers immediate escalation.
Company and viability checks
Companies House filing status and credit profile on every new umbrella before it ever touches your panel.
Reconciliation
Gross invoice to net pay reconciled, with National Living Wage compliance checked on every run.
Common questions
When did agency PAYE liability start?
6 April 2026. Responsibility for operating PAYE on the pay of workers engaged through umbrella companies now sits with the recruitment agency that supplies the worker to the end client.
If the umbrella fails to pay, can HMRC come straight to us?
Yes. The liability is joint and several, so HMRC does not have to pursue the umbrella first and can recover the full shortfall from the agency irrespective of fault. The umbrella retains the primary duty, but that does not stop HMRC recovering from you.
What if there is no UK agency in the supply chain?
The liability falls on the end-user client instead. That is why clients are now auditing the agencies they use, and agencies are auditing their umbrella panels.
Does normal payroll software cover this?
No. Standard payroll software runs your own payroll. It does not monitor the compliance status or financial health of the umbrella companies on your panel, which is where the liability actually sits.
What happens if an umbrella loses FCSA accreditation?
The daily check detects the lapse, usually within hours, and the umbrella is automatically suspended from your panel so no further placements route through it.