Recruitment Agency Compliance
Common payroll mistakes recruitment agencies should avoid
Eight mistakes that create tax, legal and reputational risk, and how to avoid them.
Most payroll problems in agency supply chains are avoidable. These are the mistakes we see most often.
- Choosing an umbrella on take-home pay alone. Unusually high take-home pay can mean pay is being moved outside PAYE.
- Too many providers. Every extra umbrella in your supply chain is another risk to monitor.
- Not verifying payslips. Accreditation logos are not enough; check payslips against payment records.
- Weak Key Information Documents. The example pay must reflect what the worker is actually paid.
- Paying construction workers under CIS without a status check. Supervision, direction or control points to employment.
- Accepting bank detail changes from third parties. This is a classic sign of exploitation and fraud.
- No audit trail. If you cannot show what you checked, you cannot show you were careful.
- Checking once and never again. Providers change. Re-check at least every year.
For the full picture, read how agencies can reduce payroll compliance risk.
Frequently asked questions
What is the biggest single risk for agencies?
Since April 2026, using an umbrella company that underpays PAYE, because HMRC can recover the shortfall from the agency.
Need help with this? Our payroll and compliance team can talk it through with you. See how we work with agencies.
Last reviewed 9 October 2026. General information, not legal or tax advice.