How recruitment agencies can reduce payroll compliance risk
Seven practical steps for agencies using umbrella companies since the April 2026 rules.
Since 6 April 2026, HMRC can recover unpaid umbrella company PAYE from the agency in the supply chain. Agencies cannot remove that liability, but they can greatly reduce the chance of it arising.
Seven practical steps
- Map your supply chainsList every umbrella company paying your workers. You cannot manage a risk you cannot see.
- Cut the list downFewer, well-checked providers on a preferred supplier list are easier to monitor.
- Check accreditationAsk which independent body accredits each provider and when it was last reviewed.
- Verify payslipsCheck samples against payment records, for example through veriPAYE, which is free for agencies.
- Read the Key Information DocumentsMake sure the pay example matches what workers are actually paid.
- Question high take-home payIf a provider beats what PAYE allows, find out how.
- Keep recordsDocument every check and decision, and repeat checks regularly.
Remember: checks and accreditation reduce risk. They do not transfer or remove the agency's legal liability.
Read our April 2026 legislation hub and common payroll mistakes agencies should avoid.
Frequently asked questions
How often should we re-check umbrella providers?
At least once a year, and whenever something changes, such as a provider's accreditation status or ownership.
Does using an accredited umbrella protect us completely?
No. It reduces the risk, but HMRC's guidance does not say accreditation removes liability.
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.