Almost four in five recruitment agencies say HM Revenue and Customs (HMRC) must modernise its systems and simplify processes ahead of sweeping legislative changes due to take effect in April 2026, new research shows.
The findings come as HMRC prepares to introduce joint and several liability as part of its Tackling Non-Compliance in the Umbrella Company Market rules. From April 6 2026, accountability for accurate tax reporting will move higher up the supply chain, meaning agencies could be held financially responsible for errors made by other parties.
The survey, carried out for recruitment platform Finity, gathered views from finance department employees in temporary recruitment agencies. It found 79% want HMRC to improve system integration and reduce administrative complexity. Three quarters (75%) plan to seek out technology to help manage compliance and carry out real-time audits.
Push for integration and technology
“The latest update from HMRC marks a welcome but significant change for umbrella companies and agencies, with accountability pushed further up the supply chain and significant financial repercussions for errors,” Finity CEO Varun Monteiro said.
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“However, our data shows a clear call from recruitment businesses for urgent action from HMRC and the broader industry when it comes to systems, processes and enabling technologies.
“Our research, combined with our detailed whitepaper, presents a bold call to action for HMRC to provide the digital infrastructure required to tackle compliance at source. While HMRC’s accompanying Transformation Roadmap is a positive step forward, it is clear better integration and the ability to cross-check payslips with HMRC data through simple APIs, directly within payroll systems, is vital.”
Monteiro added that “[o]nly by making essential tax information more accessible and instant, can the recruitment sector be truly empowered to verify their tax liabilities efficiently and with confidence”.
Compliance pressures rising
Industry observers warn that the new rules will raise the stakes for recruitment agencies, especially those working with multiple umbrella companies. Agencies will need to ensure their supply chains are watertight, with robust systems to verify that all tax liabilities are correctly reported and paid.
“Currently, businesses in the recruitment sector face significant challenges in verifying whether tax liabilities have been accurately reported and settled in their supply chain,” said Dale Simkiss, compliance expert and Non-Executive Director at Finity.
“As the industry prepares for a new legislative landscape, now is the time to modernise the way we manage tax compliance, which will help ease the burden on the sector, mitigate financial risks and create a more transparent and trustworthy tax system.”
Monteiro added that “[t]his will be made even more challenging with HMRC’s new regulations which seek to enforce stronger measures for tax transparency and accountability.
“As our research has indicated, there is strong desire for new technology, not least because of the lack of efficient, real-time access to tax data, which is likely to hamper efforts to comply, leaving businesses vulnerable to compliance failures, fraud or reputational damage.”
Preparing for April 2026
Finity’s research suggests agencies will be investing in digital tools well ahead of the deadline to avoid last-minute compliance risks. Integration between payroll software and HMRC’s systems, automation of checks and real-time visibility of liabilities are all seen as critical to avoiding penalties.
While HMRC has outlined plans in its Transformation Roadmap to improve digital services, recruitment leaders believe faster action is needed to ensure the sector can meet the demands of the new regulatory environment.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
