Avoid Payroll Pitfalls: The Smart Way to Engage Talent

Why We Pay Our Candidates Directly — No Umbrella Companies, No Shortcuts.

In recent months, there’s been increasing concern across the recruitment and staffing sector around the use of umbrella companies and other intermediaries. We’ve seen many LinkedIn posts and discussions warning of the risks and they’re very real. At Inspire Resourcing Limited, we believe transparency, fairness and compliance are not optional, they’re central to how we operate.

✅ Our Approach: Direct PAYE, No Umbrella, Full Control

• Every temporary candidate we place is engaged directly through our own PAYE number.

• We do not use umbrella companies or third‑party payroll providers.

• This means our candidates get clear payslips, proper deductions and no hidden risks.

• For our clients, it means partnering with a recruitment agency that takes responsibility for payroll compliance and oversight.

  
  

📰 What’s Changing: Significant Legal & Regulatory Risks

Recent draft legislation and new guidance from HMRC change the landscape and raise the stakes for everyone in the supply chain. Here’s a breakdown:

• From 6 April 2026, new rules will apply around PAYE in labour supply chains that include umbrella companies. https://www.gov.uk/guidance/paye-rules-for-labour-supply-chains-that-include-umbrella-companies-from-6-april-2026

• These changes introduce joint and several liability for tax (PAYE) and National Insurance Contributions (NICs). In plain English: if an umbrella company fails to pay the correct tax, other parties in the supply chain can be held liable, including end clients. https://www.gov.uk/government/publications/umbrella-companies-tackling-non-compliance-in-the-umbrella-company-market

• HMRC has made it clear that no amount of due diligence or proof of audit necessarily protects you if PAYE is unpaid in the chain.

• The legislation extends to “purported umbrella companies”, entities that may look compliant but operate in non‑compliant ways. DLA Piper

  
  

⚠️ What That Means for End Clients and Recruitment Agencies

• If you engage workers via an umbrella company — even indirectly — you face financial and reputational risk if compliance fails.

• For end clients: you may need to scrutinise your supply chain, ask tough questions, check contractual arrangements and ensure you’re not inadvertently exposed.

• For recruitment agencies: the burden of compliance is higher than ever. Ensuring the payroll provider is genuinely compliant isn’t enough, you need visibility, control and accountability.

• Even if you think “we’re just dealing with a trusted umbrella”, these rules mean the risk may still land on you if things go wrong.

  
  

🎯 Our Promise to Clients & Candidates

• For candidates: you’re engaged by us and paid by us.

• For clients: you partner with an agency that handles payroll and removes that risk from your hands.

📋 Due Diligence Questions to Ask When Working With Any Recruitment Agency

1. Payroll Responsibility:

   • Who issues payslips and handles PAYE/NIC submissions?

   • Can they provide recent examples of RTI filings or proof of HMRC registration?

2. Umbrella or Third-Party Involvement:

   • Are any workers paid through an umbrella company or external payroll provider?

   • If so, how does the agency ensure compliance and protect end clients from liability?

3. Supply Chain Transparency:

   • How many layers exist between your business and the worker?

   • Are there any offshore or subcontracted intermediaries?

4. Contracts & Liability:

   • Does the agency provide clear contracts outlining who is responsible for tax, NIC, and compliance?

   • Who is liable if there is a payroll or compliance issue?

5. Audits and Compliance Checks:

   • How often does the agency conduct internal audits of payroll and compliance processes?

   • Can they provide evidence of recent audits or compliance checks?

6. References & Reputation:

   • Can the agency provide client references who can confirm reliable, compliant payroll management?

   • Have they ever had HMRC investigations or penalties?

🔐 Final Word

With the regulatory horizon changing rapidly, the safest approach is one of transparency and direct engagement. At Inspire Resourcing, we’ve chosen this path because we believe it protects people: our candidates, our clients and our integrity. If you’re looking for a recruitment partner who puts compliance first and values your trust above everything, we’d love to talk.