A Guide to Joint and Several Liability & How It Impacts the Supply Chain
A Guide to Joint and Several Liability in Umbrella Company Payroll
- What It Is and How It Could Affect Recruitment Agencies and End Clients
Joint and several liability is one of the most important compliance developments affecting umbrella company payroll and the wider recruitment supply chain.
For transport and logistics businesses using temporary labour, this change means recruitment agencies and end clients can now be held directly responsible for unpaid PAYE and National Insurance if an umbrella company fails to meet its tax obligations.
This guide explains what joint and several liability is, how it applies to umbrella company payroll, and what it could mean for your business.
What Is Joint and Several Liability?
Joint and several liability is a legal principle that allows HMRC to recover unpaid tax from any party within a labour supply chain, rather than only the original employer.
In relation to umbrella company payroll, this means:
- If an umbrella company fails to pay PAYE or National Insurance correctly
- HMRC can pursue the recruitment agency and/or the end client
- Either party can be held liable for the full tax debt, not just a proportion
The tax risk no longer sits solely with the umbrella company.
Why Has HMRC Introduced Joint and Several Liability?
HMRC has increased enforcement due to widespread umbrella company non-compliance, including:
- Underpayment or non-payment of PAYE and National Insurance
- Disguised remuneration and mini-umbrella schemes
- Umbrella companies dissolving to avoid tax debts
Joint and several liability has been introduced to:
- Strengthen umbrella company compliance
- Prevent tax avoidance across labour supply chains
- Ensure accountability extends beyond payroll providers
This shift places greater responsibility on recruitment agencies and end clients.
How Joint and Several Liability Affects Recruitment Agencies
Under joint and several liability rules, recruitment agencies may be held directly responsible for unpaid PAYE and National Insurance, even if the failure sits with an umbrella company.
This means agencies must:
- Carry out enhanced due diligence on umbrella companies
- Monitor ongoing payroll compliance
- Ensure PAYE models are fully transparent
Failure to do so can result in:
- Significant financial exposure
- Regulatory scrutiny
- Loss of client trust
What Does This Mean for End Clients?
End clients are not automatically protected.
Depending on the labour supply chain structure, HMRC may recover unpaid tax from the end client if debts cannot be recovered elsewhere.
For transport and logistics businesses, this could result in:
- Unexpected PAYE and NI liabilities
- Compliance investigations
- Operational disruption
- Reputational damage
Even businesses that do not contract directly with umbrella companies may still face risk.
Why Umbrella Company Compliance Matters in Transport & Logistics
The transport and logistics sector relies heavily on:
- Temporary and agency workers
- High-volume labour supply
- Multi-layered recruitment chains
This increases exposure to umbrella company payroll risks, particularly where compliance is not actively managed.
Small payroll issues can quickly become significant liabilities when multiplied across a large temporary workforce.
How Businesses Can Reduce Joint and Several Liability Risk
Reducing exposure requires a proactive compliance approach, including:
- Working with recruitment agencies that manage umbrella company compliance
- Asking clear questions about PAYE and National Insurance processes
- Avoiding umbrella arrangements offering unusually high take-home pay
- Ensuring transparency across the labour supply chain
Compliance should be treated as a governance issue, not an administrative one.
Choosing a Compliant Recruitment Partner
A responsible recruitment partner should:
- Understand joint and several liability legislation
- Conduct ongoing umbrella company audits
- Use compliant payroll models
- Be transparent about supply chain structures
This protects recruitment agencies, end clients, and workers alike.
Final Thoughts
Joint and several liability represents a major shift in umbrella company payroll responsibility.
For transport and logistics businesses, it reinforces the need to:
- Understand how temporary workers are paid
- Review supply chain compliance
- Choose recruitment partners carefully
Early action reduces financial, legal, and reputational risk.
How We Can Help
If you’re reviewing your agency suppliers or want clarity around compliance risk, now is the time to act.
At Elite, we work closely with clients to ensure transparent, compliant recruitment solutions that protect both businesses and workers.
➜ Contact Elite to discuss compliant agency labour supply.


















