Temporary labour supply chains

There has been considerable controversy in recent years concerning labour structures which seek to exploit perceived tax efficiencies and to mitigate the costs of engaging temporary labour. With the upcoming increases in employer National Insurance these pressures continue to increase. In recent years HMRC has invested heavily in compliance activities while the government has announced that further legislation targeting non-compliant umbrella companies will be introduced from April 2026.

A typical labour supply chain

A typical labour supply chain might look as follows:

• The end client or hirer.
• Recruitment agency – responsible for sourcing labour and providing a service of temporary labour to the end client.
• Umbrella company – acts as the engager and payer of the worker.
• The worker (temp) – provides the service to the end client.

In practice labour supply chains can often be substantially more complex – for instance the end client...