The irony of the title of a recent article by FCSA, ‘Shifting PAYE payments to Recruiters: A Dangerous Distraction, Not a Solution, in response to Professional Passport’s proposals to address the issues raised by the introduction of Joint and Several Liability, is quite astounding and shows a complete lack of understanding, let’s say a fundamental misunderstanding, of the consequences of the rules they themselves claim credit for introducing.
Both FCSA, together with Rebecca Seeley Harris, and SafeRec claimed credit for the introduction of the new rules.
The victory I would suggest was the move to retain reporting of PAYE through the Umbrella PAYE reference and not through the agency’s PAYE reference.
What has subsequently become clear is that those who pressed for the change had clearly not understood the consequences of this change.
Both SafeRec and FCSA, through their Veripaye system, claim to solve the issues for all in the supply chain, with posts by their umbrella clients a regular feature across social channels. Both use ‘Real Time’ as a key part of their marketing strategy promoting monthly checks of RTI payments to HMRC. What they fail to do is be transparent on the consequences where this goes wrong, in a recent podcast SafeRec claimed ‘you have absolutely no liability in your supply chain’ which is, in our opinion, a complete misrepresentation of the facts.
What they have failed to recognise is that the only guarantee their processes offer under these new rules is a guarantee of additional liabilities to agencies should something go wrong.
To illustrate this here is a worked example of life under these new rules;
The first point that has to be understood is how PAYE actually operates.
PAYE is structured in weekly cycles, which together make up a monthly cycle. Payments made during the weeks for the first monthly cycle become due on the 22nd of the following month.
So weekly paid workers are likely to have around seven reported payments with corresponding RTI returns made to HMRC.
When the RTI is settled on 22nd of the month following there will still be three payments reported via RTI where the liability has not been settled.
So, if an agency has a weekly PAYE bill of £20,000 on their workers through an umbrella this creates a rolling liability, at no point is this liability zero.
Rounding numbers for ease of understanding this results in an agency holding a rolling liability of between £60,000 and £160,000 if an umbrella fails. The level of the liability is determined by the point in the cycle when this failure occurs. There is never a point where there is no liability.
The only way an agency can have zero liability is to pay the relevant PAYE due directly to HMRC after each and every pay run. This allows them to clearly demonstrate payment and remove themselves from further liabilities.
Where the agency sends all the money to the umbrella and a failure event occurs, the resulting liability is an additional cost to the agency as they had already sent all the money to cover the PAYE liabilities to the umbrella, effectively resulting in the agency paying the PAYE twice.
These are the facts of the new system in operation from April 2026.
To be clear, the umbrella still does all the work they have always done, and the good ones still add significant value to the supply chain and therefore we do not see how an agency making two payments per umbrella, one to the umbrella for workers’ pay and one to HMRC for PAYE, would undermine that value.
We believe what is more likely to undermine the umbrella market is a misrepresentation of the facts and promising a risk-free solution where none exists. When these realities come to light it threatens the whole market, the very thing those claiming to protect it may inadvertently be putting in danger.
