If you are a recruiter placing contractors through umbrella companies, you already know that compliance is part of the job. What has changed is how much of that compliance burden now sits with you.
Government enforcement activity has increased significantly over the past two years. HMRC is investing more resource in supply chain investigations, and the Employment Agency Standards Inspectorate has expanded its remit. The message from regulators is consistent: ignorance of what happens further down your supply chain is no longer an acceptable defence.
The recruiter’s exposure
When a contractor is placed through a non-compliant umbrella company, the recruiter that facilitated the arrangement is exposed. That exposure can take several forms:
Tax liability that transfers up the chain when an umbrella fails to account for PAYE correctly
Reputational damage when workers complain about missing holiday pay or unclear deductions
Loss of end-client contracts, particularly where the client requires evidence of supply chain due diligence
Regulatory action from the EAS Inspectorate for failing to meet conduct regulations
None of these outcomes are hypothetical. They are happening now, across the industry, to agencies of all sizes.
What good due diligence looks like
Effective supply chain compliance is not about ticking boxes once a year. It requires ongoing visibility into how your partners operate. At a minimum, recruiters should be verifying:
That umbrella companies hold current, independently verified accreditation
That worker payslips match the expected calculations for gross-to-net pay
That holiday pay is being accrued and paid correctly
That employment contracts reflect the actual working arrangements
That no disguised remuneration or tax avoidance schemes are in play
Doing this manually across dozens of umbrella partners is time-consuming and error-prone. That is exactly the problem Diligence Hub was built to solve.
How Diligence Hub simplifies the process
Diligence Hub brings together payroll verification, document management, and partner assessment into a single platform. Through veriPAYE, recruiters can verify that contractors are being paid correctly in real time, without waiting for end-of-year audits to flag problems. The Diligence Exchange provides a structured way to assess and compare umbrella company compliance credentials, replacing ad-hoc spreadsheets and email chains with a consistent, auditable process.
The result is not just better compliance. It is a clearer picture of your supply chain, delivered with less effort and fewer surprises.
If you are still relying on self-certification from your umbrella partners, it is worth asking what you would do if one of them turned out to be non-compliant tomorrow. Diligence Hub gives you the tools to answer that question before it becomes a problem.
