Joint & Several Liability (JSL): New Rules for Contractor Supply Chains

Changes to contractor tax legislation from April 2026 will impact how employment tax liabilities flow through contractor supply chains, which may affect how organisations hire and manage contractors.

The new Joint and Several Liability (JSL) rules allow HMRC to recover any underpaid or unpaid employment taxes from relevant parties in the labour supply chain, where a worker is supplied via an umbrella company and tax is not correctly accounted for. 

This means that responsibility for unpaid tax can extend across the entire supply chain, including recruitment agencies, umbrella companies, and other intermediaries. In certain circumstances, liability may also reach the end client, even where they were not directly responsible for the non-compliance.

Further information on JSL can be found in HMRC’s labour supply chain guidance

These legislation developments highlight the importance of understanding your labour supply chains, particularly when engaging with contractors and should be considered alongside the existing IR35 (off-payroll working) legislation.

On IR35, HMRC explains that: ‘the off-payroll working rules ensure that workers who would have been an employee if they were providing their services directly to the client pay broadly the same Income Tax and National Insurance contributions as employees.’  You can read the full HMRC IR35 guidance here.
  

How can you minimise your risks when using contractors?

We recently hosted a webinar exploring these changes in more detail, including IR35, Joint and Several Liability, and what they mean for organisations engaging contractors.

• Watch our ‘Contractor Compliance Update: IR35 & JSL’ webinar
• Read our ‘Contractor Legislation 2026: Are you at risk?’ blog
  
  

How can Spectrum IT Recruitment help?

At Spectrum IT Recruitment, we help organisations minimise the complexities and risks associated with hiring contractors. Our solutions include:

• IR35 status determination tool – enabling you to complete correctly classified determinations
• ‘Off-Payroll Protect’ (IR35 insurance) – providing cover in the event of an IR35 determination dispute (subject to conditions)
• Access to IR35 experts – providing guidance from our Kingsbridge partners
• SafeRec payroll monitoring – auditing umbrella companies’ payroll processing in real time, as a SafeRec Plus Accredited Agency 
• Supply chain partnership – helping reduce exposure under Joint and Several Liability (JSL) rules 
• Experienced team – our specialist Contract teams understand the market and the legislations

This gives you greater visibility, stronger compliance oversight, and reduces the risks of potential employment tax liabilities arising.

If you’re planning to hire contractors or want to review your workforce strategy in light of these legislative changes, our contract specialists are ready to support you.

* This article is provided for awareness purposes only and does not constitute tax or legal advice. Readers should refer to HMRC guidance for the most up-to-date information.

Last updated: 23/03/2026