Joint & Several Liability: Five Key Takeaways for MSPs and Neutral Vendors

With the new Joint & Several Liability (JSL) regime now in force, last week we partnered with WTT Legal who provided our Members with a practical webinar exploring what the legislation means for MSPs, neutral vendors and recruitment businesses.

Hosted by Rhys Thomas, Managing Director at WTT Legal, the session explored why JSL represents one of the most significant shifts in supply chain compliance in recent years and outlined the practical steps organisations should already be taking to reduce their exposure.

For those not able to attend, we have put together the key takeaways from the event:

1. Joint & Several Liability has fundamentally changed supply chain risk

Since 6 April 2026, where an umbrella company fails to pay the correct PAYE and National Insurance, HMRC can pursue another party within the labour supply chain for the full liability.

Perhaps the biggest message from the webinar was that there is no due diligence defence. Whilst robust compliance processes remain essential, they do not remove liability if tax has not been paid correctly.

For organisations operating MSP or neutral vendor models, this means prevention, not simply documentation, must become the priority.

2. Visibility beyond Tier 1 has never been more important

Many organisations have a clear understanding of their direct suppliers, but considerably less visibility of what happens further down the supply chain.

The webinar highlighted several areas businesses should now be reviewing, including:

• which payment models are being used
• which umbrella companies are paying workers
• whether connected businesses exist within the chain
• whether any offshore parties could transfer liability back into the UK.
• regular supply chain audits
• verification of payment models
• ongoing checks of approved umbrella companies
• monthly evidence gathering and reporting
• documented governance processes with clear ownership.
• limiting the number of approved umbrellas
• independently verifying providers
• monitoring activity in real time
• identifying off-PSL usage quickly
• removing suppliers where standards are no longer met.
• appoint a named JSL risk owner
• map their entire labour supply chain
• review all umbrella and agency relationships
• strengthen governance and contractual protections
• implement ongoing monthly monitoring rather than relying on historic due diligence.

Rhys explained, the organisations carrying the greatest liability are often those with the least visibility of what sits beneath them.

3. The Ducas case should be viewed as a warning, not reassurance

Although HMRC's high-profile £171 million Ducas case ultimately collapsed on procedural grounds, WTT Legal stressed that businesses should not take comfort from that outcome.

The case demonstrated HMRC's willingness to pursue significant liabilities through labour supply chains. Under the new Chapter 11 legislation, HMRC now has a direct statutory route to recover unpaid tax from the relevant party, making future enforcement considerably more straightforward.

The message was clear: the legislation has changed, and organisations should assume HMRC will make use of these new powers.

4. Compliance must become an ongoing process

One-off onboarding checks are no longer sufficient.

Instead, organisations should be moving towards continuous monitoring through:

• regular supply chain audits
• verification of payment models
• ongoing checks of approved umbrella companies
• monthly evidence gathering and reporting
• documented governance processes with clear ownership.
  
  

A supply chain can change rapidly, meaning compliance needs to evolve from an annual exercise into a business-as-usual activity.

5. Your Preferred Supplier List should be treated as a control, not simply a list

A recurring theme throughout the webinar was the importance of maintaining a robust, actively managed Preferred Supplier List (PSL).

That means:

• limiting the number of approved umbrellas
• independently verifying providers
• monitoring activity in real time
• identifying off-PSL usage quickly
• removing suppliers where standards are no longer met.
  
  

WTT made it clear that a continuously monitored PSL is one of the strongest controls available under the new regime.

What should organisations do now?

The webinar closed with a practical 90-day action plan, encouraging organisations to:

• appoint a named JSL risk owner
• map their entire labour supply chain
• review all umbrella and agency relationships
• strengthen governance and contractual protections
• implement ongoing monthly monitoring rather than relying on historic due diligence.

Final thoughts

Joint & Several Liability represents more than another compliance obligation, it completely changes how labour supply chains need to be governed.

The key message from WTT Legal was simple: organisations that understand their supply chain, monitor it continuously and maintain strong governance will be far better placed to manage both tax and commercial risk in the months ahead.