Joint and Several Liability 2026: The Hidden Financial Risk in Your Contractor Supply Chain

From 6 April 2026, a major legislative change will reshape how organisations engage contractors directly and via umbrella companies. If your business relies on contingent workers, this update to the Income Tax (Earnings and Pensions) Act 2003 introducing Joint and Several Liability (JSL) for unpaid or incorrectly paid PAYE and National Insurance Contributions will directly affect you.

To help you understand the impact and prepare effectively, we’ve created a short explainer video walking through the changes, real‑world scenarios, and the actions you should take now.

Watch the explainer video

What Is Joint and Several Liability?

Under the new legislation, HMRC can recover 100% of unpaid or incorrectly paid PAYE and NICs from another party in the supply chain if an umbrella company fails to pay a contractor correctly.

This means that even if the error occurs elsewhere, your organisation could still be held fully liable.

The rules apply to any payments made on or after 6 April 2026, even if the work was completed earlier. For example, work done in March but paid in April will fall under the new JSL rules.

Why This Matters for End Clients and Agencies

Scenario 1: You engage contractors directly and they are paid via umbrella companies

If you engage contractors who are paid through umbrella companies, you may be liable for any unpaid or incorrect PAYE or NIC deductions. This risk multiplies when you engage multiple contractors through multiple umbrella companies, making governance and compliance monitoring more complex.

Scenario 2: You engage contractors via agencies, and they are then paid via umbrella agencies

If an agency sits between you and the umbrella company, the agency becomes liable – but only if it is genuinely independent. If the agency and umbrella company are connected (e.g. under common ownership), they may be treated as a single entity, and liability passes back to you.

How Organisations Can Reduce Their Risk

There are two primary remedial options:

1. Introduce an agency into the chain

If you currently engage contractors directly, adding an agency into the supply chain between you and the contractor can create a protective buffer – provided they are not connected to the umbrella companies.

2. Centralise governance through a Managed Service Provider (MSP) 

If you utilise multiple agencies to engage contractors, and those contractors are paid through multiple umbrella companies, engage a Managed Service Provider (MSP) to manage your entire supply chain on your behalf. Their systems, processes and controls can provide the governance and oversight required to ensure compliance, and provide a single point of accountability to protect your balance sheet risk.

Although the legislation becomes active in April, liability applies to any payments made after 6 April. This means:

• Contractors working in March may be paid in April
• Those April payments fall under JSL
• If your supply chain isn’t compliant by then, you carry the risk

Early assessment and remediation are essential to avoid last‑minute disruption and ensure contractors are paid correctly and compliantly.

Why Choose The Curve Group as Your MSP Provider

Bringing in an MSP is one of the most effective ways to reduce Joint and Several Liability risk – but only if that MSP has the independence, expertise and governance capability to manage your entire contractor supply chain.

The Curve Group acts as a fully independent MSP, ensuring:

• A single point of accountability
• Full visibility of your contractor and umbrella supply chain
• Consistent compliance checks and due diligence
• Removal of connected‑party risk
• A streamlined, well‑governed PSL/ASL
• Protection from the complexities of multi‑agency, multi‑umbrella arrangements

Our MSP model is already helping organisations prepare for the 2026 changes with confidence. Find out more.