{"id":42763,"date":"2026-06-12T17:08:18","date_gmt":"2026-06-12T17:08:18","guid":{"rendered":"https:\/\/www.guardpass.com\/resources\/?p=42763"},"modified":"2026-06-12T17:13:49","modified_gmt":"2026-06-12T17:13:49","slug":"joint-and-several-liability","status":"publish","type":"post","link":"https:\/\/www.guardpass.com\/resources\/joint-and-several-liability\/","title":{"rendered":"Joint and Several Liability: What Security Companies Need to Know in 2026"},"content":{"rendered":"\n
\n

<\/p>\n\n\n\n

\n

From 6 April 2026, changes are in force to the UK umbrella company sector that substantially alter how tax risk is allocated across labour supply chains.<\/p>\n\n\n\n

Joint and Several Liability means that if an umbrella company fails to pay the correct PAYE or National Insurance Contributions, HMRC can go after recruitment agencies and end clients for the full unpaid amount. Every party in the labour supply chain becomes jointly and severally liable for tax obligations that stem from an umbrella company\u2019s failure.<\/p>\n\n\n\n

Two points are critical to understand from the outset. First, liability is joint and several, meaning HMRC can pursue any party in the chain for 100% of the unpaid amount, regardless of where the failure originated. Second, and perhaps most importantly, there is no reasonable care defence \u2014 even if an agency carried out thorough due diligence, it can still be held fully liable.<\/p>\n\n\n\n

The new rules aim to combat tax non-compliance, protect workers, and level the playing field by eliminating rogue umbrella providers. The security sector is directly in scope.<\/p>\n\n\n\n

How Does the Liability Chain Actually Work?<\/strong><\/h1>\n\n\n\n

Understanding the mechanics matters because your position in the chain determines your direct exposure.<\/p>\n\n\n\n

Umbrella companies remain employment intermediaries and the PAYE employer in the standard model, but they are no longer the only party potentially liable for payroll taxes where things go wrong. Where a worker is supplied via an umbrella company and there is a UK recruitment agency in the chain, the agency will generally be the party that HMRC can pursue for any PAYE and Class 1 NIC shortfall.<\/p>\n\n\n\n

If the client contracts directly with the umbrella, or the agency is offshore or connected to the umbrella, the end client may instead be exposed.<\/p>\n\n\n\n

Liability for the taxes occurs from the moment that a payment is due to HMRC. The liability falls on both the umbrella company and the other liable party at the same time \u2014 so technically the amount the umbrella has to pay is an amount the other liable party also owes, even though they are not the ones reporting to HMRC.<\/p>\n\n\n\n

The practical implication: if your staffing agency uses an umbrella model and that umbrella fails \u2014 through insolvency, fraud, or simple non-compliance \u2014 HMRC can pursue the agency first, or you directly if the agency is offshore, connected to the umbrella, or otherwise unavailable. HMRC is under no obligation to warn you that a non-compliant umbrella is in your supply chain, and no one should rely on receiving a warning before enforcement begins. <\/p>\n\n\n\n

Critically, insolvency does not extinguish the liability: HMRC can pursue you for unpaid taxes even after the umbrella company has collapsed or gone into administration. The most likely scenario in which security companies face a JSL demand is not an investigation into a live umbrella \u2014 it is post-insolvency pursuit once the umbrella itself cannot pay.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Does Joint and Several Liability Apply to Security Companies?<\/strong><\/h1>\n\n\n\n

Yes, if umbrella companies are present in your labour supply chain \u2014 and in the security sector, they frequently are.<\/p>\n\n\n\n

The reforms are primarily focused on arrangements involving umbrella companies. Where umbrella companies are used to employ and pay temporary workers, liability for unpaid PAYE and National Insurance may extend beyond the umbrella itself.<\/p>\n\n\n\n

In practical terms, this applies to you if you:<\/p>\n\n\n\n