TRANSPARENCY
Joint and Several Liability (JSL): How TRANSPARENCY Can Help You Audit, Analyse, and Stay One Step Ahead
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Ross Gylanders
June 18, 2026
In the modern UK recruitment landscape, navigating the temporary labour supply chain requires a strict, proactive approach to compliance. For recruitment agencies, Managed Service Providers (MSPs), and End Clients, one of the most significant legal and financial concepts to understand is joint and several liability.
As HM Revenue and Customs (HMRC) continues to intensify its crackdown on tax avoidance. Non-compliant umbrella companies and payroll schemes, put every business in the supply chain at risk. If an umbrella company fails to pay the correct taxes, the legal framework allows authorities to pass that debt up the chain.
Utilising a workforce management solutions provider like ADVANCE will eliminate your exposure.
Joint and several liability is a legislative act introduced by the UK Government to be used in both civil law and UK tax legislation. When two or more parties share joint and several liability for a debt or legal obligation, it means they are:
Jointly Liable: All parties are collectively responsible for the entire obligation.
Severally Liable: Each individual party is independently responsible for the entire obligation.
In practical terms, if a non-compliant umbrella company defaults on its tax obligations (such as PAYE, National Insurance contributions, or the Apprenticeship Levy), HMRC does not have to split the debt proportionally among the supply chain. Instead, they can legally pursue any single entity within that supply chain, often the recruitment agency or the end client, for 100% of the unpaid tax, penalties, and interest.
ADVANCE have created a video series that explains each of the facits of JSL in detail.
Looking for more information about Joint and Several Liability, and how it could impact you. Click on the links below
Chapter 12: What do you mean by “real time”?
Chapter 13: Cleaning up where liability goes with end-clients
Chapter 14: How are end-clients reacting?
Chapter 15: Is the supply chain on temp work going to tighten?
Chapter 16: What’s the advice for recruiters with their supply chain?
Chapter 17: Any “silver bullet” quick fixes?
Chapter 18: Other legislation on the supply chain impact
Chapter 19: Employee Rights Bill liabilities
Chapter 20: BDO Fact Sheet on Umbrella Company Engagement (Part 1)
Chapter 21: BDO Fact Sheet on Umbrella Company Engagement (Part 2)
Chapter 3: Where does liability attach itself to?
Chapter 4: What happens when the unexpected happens? (Part 1)
Chapter 5: What happens when the unexpected happens? (Part 2)
Chapter 6: What about retrospective problem umbrella providers?
Chapter 7: How does an agency manage risk?
Chapter 8: What about small to medium agencies managing their risk?
Chapter 9: Legislation about promotion of tax avoidance schemes
Chapter 10: How strict is the legislation on corporate criminal offences?
Alternatively, watch our entire series on our YouTube channel.
As the recruitment industry navigates the high-stakes shift in line with Joint and Several Liability (JSL), the burden of proof is now shifted to the agency. To protect your business from retrospective HMRC tax claims, you need more than just “paper-based” due diligence—you need live, verifiable data.
The ADVANCE Transparency Portal is specifically engineered to bridge this gap, redefine compliance and provide recruitment partners with a real-time window into their supply chain.
Got questions? We are here to help.
We understand that before applying for a new role, you like to get more of an understanding here are a few of our most frequently asked questions about working at ADVANCE.
Joint and several liability impacts the recruitment supply chain if an umbrella company or payroll provider fails to pay the correct UK tax or National Insurance, HMRC can legally pursue other parties in the supply chain to recover the debt. This allows HMRC to hold the recruitment agency, and potentially the end-client, fully responsible for 100% of the unpaid tax if the primary employer defaults.
Yes. Under strict UK legislation—including off-payroll working rules (IR35), managed service company (MSC) legislation, and targeted anti-avoidance regulations—HMRC has the power to transfer unpaid tax liabilities up the supply chain. If your agency uses a non-compliant umbrella provider that utilises disguised remuneration or unlawful tax avoidance schemes, the financial penalty can be passed directly to you.
If a recruitment agency goes bust or cannot pay a transferred tax debt, HMRC can move further up the chain to the end-client. This creates severe financial and reputational risks for your clients. To protect their businesses, modern end-clients increasingly demand that agencies prove they only use fully audited, FCSA-accredited, and SafeRec certified payroll partners.
The only effective way to mitigate this risk is through rigorous supply chain due diligence. Your agency should establish a strict Preferred Supplier List (PSL) consisting exclusively of compliant payroll providers. Avoid any provider offering unusually high take-home pay (such as “80% or 90% returns”), enforce regular independent auditing, and conduct thorough quarterly compliance checks on all payroll records.
