Supply-chain review
Know where April 2026 PAYE exposure sits in your supply chain.
From 6 April 2026, where an umbrella company fails to pay the correct PAYE, HMRC may recover the shortfall from the agency contracted with the end client, or from the end client where no agency sits in the chain, as well as from the umbrella company. The exposure follows the contract with the end client. If the contractual chain has not been mapped, the exposure is an assumption.
This page provides general information only and is not legal or tax advice. Questions of liability on a specific chain need professional legal or tax input.
The problem
Three things agencies get wrong about the new rules
Checks are not a shield
Due diligence can reduce the risk of a provider failure, but does not by itself remove the statutory liability. If a failure happens anyway, good checks change nothing about who HMRC can pursue.
Labels are not a shield
The rules turn on whether a third party employs the worker. An arrangement described as outsourced employment or a PEO can sit inside them just as an umbrella does. The label on the invoice is not the test.
The chain decides, not the habit
Where an MSP or another agency sits in the chain, the contractual map must be checked. The relevant question is which party holds the contract with the end client, and on many books that answer varies client by client.
How it works
Map the chain before choosing a structure
Map the contracts
Who contracts with each end client, across direct, MSP and multi-tier work. One map, client by client, rather than one assumption for the whole book.
Locate the populations
Where umbrella and outsourced-employment workers sit in that map, and where the contractual and worker-model overlap creates the exposure worth quantifying.
Examine the structural routes
The realistic structures side by side with honest trade-offs: what each genuinely changes, what it costs, and what it does not change.
Name the professional questions
The specific points that need legal or tax input before any decision, written down so your advisers answer the right questions once.
The working view
What a mapped chain looks like
The map below is illustrative, to show why the same agency can be exposed on one client and not on another. The live version is built contract by contract from your book.
Where the umbrella fails to pay the correct PAYE on this work, recovery from the agency contracted with the end client is possible under the April 2026 rules.
The position here depends on the actual contractual chain, which must be checked rather than assumed. The relevant question is which party holds the contract with the end client.
What you receive
The exposure made visible, honestly
- A contract map of the book. Who contracts with each end client, split across direct, MSP and multi-tier work.
- The exposed populations located. Where umbrella and outsourced-employment workers overlap with the contracts you hold direct.
- The structural routes worth examining. Side by side with their genuine trade-offs, including what each route does not change.
- The questions for your advisers. The specific legal and tax points a decision would rest on, so professional input is focused and once.
The claim you should never accept, from us or anyone
No provider, accreditation, check or due-diligence process removes the statutory PAYE liability the April 2026 rules create, and neither does moving workers to a PEO or outsourced-employment provider. What a genuine employment transfer can change is who carries the employment itself: the rights, statutory payments and employment liabilities. Anyone who says their structure makes that statutory exposure disappear is describing a structure the legislation was written to catch.
When this is probably not the right review: a book that is wholly agency-PAYE, with no umbrella or intermediary workers anywhere in it, has little for this map to find. Run the Friday Test instead; it covers the pressure points that do apply.
Review again when
A mapped chain is accurate on the day it is drawn. Redraw it when any of these changes:
- A new end-client contract is signed. Every new direct contract changes the map; the exposure follows the contract.
- An MSP enters or leaves a relationship. The chain above you moving is exactly the change that must be checked rather than assumed.
- The umbrella population changes. New providers, provider consolidation or workers moving between models all move the exposure.
- Any contractual chain is restructured. Novations, assignments and group reorganisations can change who holds the end-client contract.
Map my supply chain
Start with your book, not a seminar
Tell us roughly how the book splits across direct and MSP work and where umbrella workers sit. We will usually respond within one UK working day, and nothing goes to any third party without your say so.
What happens next: we read what you send, come back within one UK working day, and agree the shape of the mapping work with you before anything else happens. Nothing reaches any third party without your separate approval.
Want the wider payroll picture first? Run the Friday Test. Background reading: what the April 2026 rules actually changed.
Decide with a map, not with nerves
Client by client, contract by contract, before choosing any structure. Then the conversation is about numbers on specific contracts, which is a conversation a director can actually win.