By Varun Monteiro, CEO of Finity
In April 2026, the government will introduce Joint and Several Liability (JSL), a policy that will reshape how compliance is governed across the temporary labour market. For the first time, employment agencies and their end clients will be held jointly responsible for unpaid payroll taxes when working with non-compliant umbrella companies.
While the aims of the policy are clear and positive – protect workers, close the tax gap, and prevent fraudulent operators from undercutting legitimate businesses – the success of it will depend on more than legislation alone. Without modernised digital infrastructure, JSL risks creating unnecessary complexity and costs for the very businesses it seeks to protect.
Listening to the sector
Earlier this year, we surveyed recruitment agency finance professionals to gather their views of the reforms, and the results were revealing.
Nearly 80% of those agencies felt that HMRC needed to modernise and integrate its systems if JSL is to succeed. And three-quarters expect to rely heavily on new technology to manage compliance and conduct real-time audits.
This is not the sector’s resistance to reform, on the contrary, agencies recognise the need for change and are prepared to invest in compliance. But they are equally clear that current HMRC systems are not fit to support this scale of change.
The risk of standing still
We believe that without the right infrastructure in place, JSL risks creating unintended negative consequences. For example, agencies could face spiralling administrative costs as finance teams battle with fragmented processes, while workers could face delayed or incorrect pay as compliance checks slow down.
This is about more than efficiency; public trust in both the tax system and the temporary labour market depends on reforms being implemented fairly and effectively. With less than six months until the deadline, the time to modernise is now.
The technological gap and roadmap
The recruitment sector is already showing what is possible when compliance is embedded into everyday processes. Platforms like Finity are helping agencies, umbrella companies and payroll bureaus to automate auditing, integrate systems, and create transparent, auditable records.
But for this to work at scale, HMRC must play its part. Without integrated, real-time systems, private sector innovation risks hitting a wall. And while in principle, technology can shoulder much of the compliance burden, this will only be achievable if government systems enable it.
The government has taken positive steps with the HMRC Transformation Roadmap, which aligns with the sector’s anticipated reliance on stronger digital infrastructure. However, the lack of efficient, real-time access to tax data is leaving businesses exposed to compliance failures and fraud.
Our proposed technological roadmap would help overcome these challenges. For example, leveraging AI, providing access to real-time tax data and developing a suite of publicly available APIs to enable recruitment businesses to remain compliant, reduce risk and meet their tax liabilities efficiently and confidently.
Right now, recruitment businesses have little visibility of tax liabilities across their supply chains. Without real-time access to this data, many are forced to depend on third-party advisors or manual checks that are slow, open to error and inevitably, increased costs and complexity which ripples through the entire chain.
The challenge is compounded by the fast-moving nature of recruitment, where thousands of transactions occur every week. Despite this, currently HMRC provides no inbound mechanism for businesses to access its wider dataset, leaving agencies unable to confirm compliance as transactions happen. This lack of transparency increases the risk of accidental non-compliance and major financial consequences.
Unless HMRC equips businesses with the right digital tools to make essential tax information instant and accessible, there will remain a stark mismatch between the tougher compliance now required and the limited capabilities currently available to deliver it.
The solution: modernise, integrate, simplify
The recruitment sector is clear about what it needs: digital compliance tools that are fast, reliable and built into existing systems. That means API-driven access to tax data, automated real-time auditing, and seamless integration with payroll and back-office platforms.
Modernisation on these terms would deliver faster checks, reduce fraud, and build stronger trust throughout the labour supply chain. At Finity, we are calling for HMRC to roll out three APIs:
- Employer Liability Verification API – enabling secure, real-time verification of supplier tax liabilities (PAYE, CIS, VAT) without exposing sensitive data.
- Payslip Verification API – confirming contractor payments match HMRC’s official Full Payment Submission (FPS) records, ensuring each worker is correctly reported and visible to HMRC.
- Extension of HMRC’s existing RTI platform – enhancing current infrastructure with APIs rather than requiring a costly and disruptive full system overhaul.
Together, these would give businesses certainty that workers are properly reported, payslips are accurate, and liabilities are paid in full. Crucially, because most payroll platforms already connect with HMRC’s RTI, these enhancements would not require a costly rebuild. Instead, they would unlock the full potential of the systems we already have.
A shared responsibility
This reform isn’t just about liability; it is about shared responsibility. Agencies and the entire recruitment supply chain are being asked to step up, and our research shows they are ready and willing to do this. But government must mirror this commitment by delivering a digital infrastructure that is fit for purpose.
Conclusion
Joint and Several Liability is a welcome and much needed step towards tackling tax avoidance, however, legislation without infrastructure will cause frustration and disillusionment.
We therefore urge HMRC to modernise now to stand the best chance of delivering a compliance system that works for businesses, workers and public funds. With less than six months to go before the policy rolls out, we must not only have new rules, but the systems in place to make them work.
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