Umbrella Company PAYE Reform Compliance Check

Why this matters

From 6 April 2026, responsibility for accounting to HMRC for PAYE income tax and National Insurance on payments to workers supplied through umbrella companies shifted away from the umbrella company itself. Under the reform legislated through the Finance Act 2025 and accompanying regulations, the recruitment agency that supplies the worker (or the end-user business directly, where no agency sits in the chain) is now the party HMRC will pursue if the umbrella company fails to pay over the correct tax and NIC. This was introduced to close down the “mini umbrella company” fraud model, where large numbers of shell umbrella companies were used to fraudulently claim employment allowance and dodge payroll taxes, leaving HMRC to chase workers or nobody at all.

The practical effect is that agencies and end-clients who use umbrella companies in their labour supply chain can no longer treat what the umbrella company does with PAYE as someone else’s problem — a non-compliant or fraudulent umbrella company anywhere in the chain can now leave the agency or hiring business liable for the full unpaid tax and NIC debt, potentially running to hundreds of thousands of pounds where multiple workers and pay periods are involved. Sectors that rely heavily on umbrella-paid contractors — construction, healthcare, IT contracting, and logistics — are most exposed, and due diligence on umbrella companies used in the supply chain is now a genuine financial risk control, not just good practice.

What you'll need

• Whether you engage temporary or contract workers through a recruitment agency
• Whether any of those workers are paid via an umbrella company
• Your role in the labour supply chain (end client, agency, or both)
• Any due diligence checks currently carried out on agencies or umbrella companies

What you'll get

A personalised compliance report covering: a score out of 100, an executive summary, a list of findings ranked by severity, and a prioritised action plan with timeframes.