What’s changing — and when?
From April 2026, new umbrella legislation will shift more responsibility up the supply chain. If an umbrella provider fails to operate Pay As You Earn (PAYE) and National Insurance correctly, HM Revenue & Customs (HMRC) can pursue unpaid amounts from another party in the chain on a joint and several basis. Some aspects of the Employment Rights Bill that strengthen worker protections are expected to follow in April 2027. The implications for agencies and managed service providers are material: supplier governance becomes a board-level priority, not an admin task.
What does Joint and Several Liability actually mean for agencies and MSPs?
In plain terms, if an umbrella gets PAYE wrong, HMRC can recover unpaid tax and National Insurance Contributions from the agency or MSP that sits closest to the end client. The JSL rules increase supply‑chain risk for agencies and MSPs, making documented due diligence and audit trails important to mitigate potential recovery of tax by HMRC.
What should agencies and MSPs do now that can’t wait for 2026?
They can start by implementing a structured 30–60–90 day plan:
- Next 30 days: request current accreditation and audit evidence from every umbrella on your Preferred Supplier List (PSL). Sample payslips and Real Time Information (RTI) reports.
- Next 60 days: score suppliers by risk, close gaps, and update contracts with right‑to‑audit and remediation clauses.
- Next 90 days: run a transition project to ensure your contractors are all engaged via your new PSL.
What evidence will clients and agencies expect to see?
Three things. First, current accreditations and independent reporting that evidence ongoing compliance (for example, SafeRec real‑time auditing). Second, transparent, itemised payslips that match RTI/P32 submissions and confirmed PAYE payments to HMRC on time each month. Third, a clear audit trail and right‑to‑audit in your contracts, with documented remediation steps.
How do these changes impact contractors day to day?
Contractors should see clearer payslips, consistent statutory payments and faster resolution of queries. Where agencies and MSPs tighten their PSLs, you reduce disruption: fewer payroll disputes, fewer amended tax filings, and more confidence that pensions and deductions are handled correctly.
What are the red flags that signal partner risk?
Payslips issued in parts or without an itemised PAYE and National Insurance breakdown. Lack of current accreditation or missing/dated audit evidence. Frequent amended filings without a clear explanation. Complex cross‑border set‑ups with unclear withholding or residency treatment. Poor service scores and recurring complaints from contractors.
What should agencies ask their umbrella partners this quarter?
Ask for current FCSA accreditation, SafeRec certification (or an equivalent real‑time auditing solution), and request an audit with scope and dates. Request sample payslips and RTI/P32 evidence for a defined payroll run. Confirm system access to agency‑level dashboards and independent reporting. Check financial stability via recent accounts. Ensure contracts include right‑to‑audit and defined remediation timelines.
How is Sapphire helping clients manage the risk and the workload?
We build compliance into the operating model. Sapphire holds current accreditations including FCSA (seven consecutive years), SafeRec and APSCo Trusted Partner. SafeRec independently audits every Sapphire payroll run, verifying PAYE and National Insurance calculations, matching payslips to RTI, and confirming PAYE payments to HMRC each month. That gives agencies independent reporting and a digital audit trail as standard. Our Trustpilot rating is 4.9 from 4,106 reviews, which reflects the service side that keeps contractors confident and reduces operational noise.
Where does technology fit – is this just policy and paperwork?
Technology is central. Quartz, our cloud Pay & Bill platform, unifies timesheets, expenses, compliance, approvals and payroll and reduces back‑office admin by up to 80%. For compliance leaders, the value is visibility: consistent data, faster reconciliations and exportable reports that slot straight into your audit pack and board reporting.
If a partner fails a check, what is the safest way to transition?
Map the change, communicate early, and audit as you go. Define the effective date in assignment schedules. Brief consultants so they can support contractors through onboarding. Run a 30‑day post‑live review with independent evidence to confirm everything is operating as expected. Done well, you minimise disruption while materially lowering risk.
Your headline advice to agency and MSP leaders?
Treat legislation as a governance upgrade, not a hurdle. Build a robust, documented PSL review cycle. Require independent reporting, not just a badge. Make audit trails part of business as usual. If you do that now, you reduce financial exposure, protect your contractor experience and strengthen client trust ahead of 2026.
