Understanding joint and several liability: A growing concern for social care providers

From 6 April 2026, PAYE and NI for temporary workers is set to become a significant concern for organisations in the social care sector and beyond.  This is because the government has introduced legislation which may move liability for such taxes from the employer of temporary workers to other organisations in the supply chain.

What is joint and several liability?

Joint and several liability refers to a legal principle whereby multiple parties can be held responsible for the same obligation, and each party can be pursued independently for the entire debt or liability. This means that if one party fails to meet its obligations, the other parties involved may be held fully responsible. From 6 April the government is changing the law so that where a company employing temporary workers under a contract of employment fails to pay PAYE / NI HMRC can pursue other companies in the supply chain (referred to in the legislation as “relevant parties”) for those unpaid taxes.

Relevance to the social care sector

In social care sector, most care providers use temporary workers supplied by  employment agencies, sometimes supplied where such employment agencies are themselves supplied by umbrella companies, and subcontracted providers to deliver services. These third-party providers typically handle staffing, payroll, and tax deductions for workers. However, if there is an issue with the payment of taxes or payroll deductions, HMRC may be able to hold care providers liable for the unpaid taxes, even if they were not directly responsible for payroll or tax administration.

Key points about joint and several liability in social care

1. Risk exposure: Health and social care providers may be at risk of being held liable for unpaid Income Tax, National Insurance contributions, or other payroll-related taxes even if they were not directly responsible for managing payroll. This is a concern especially for large-scale care providers who rely on third parties for staffing and payroll management.
2. HMRC’s approach: HMRC may be able to pursue “relevant parties” for unpaid tax liabilities where a supplier of temporary labour has failed to meet its PAYE / NI obligations. Even though the care provider may not have handled the payroll directly, HMRC has the power to hold the care provider accountable for the taxes owed.
3. Rising awareness: Many employers and care providers may be unaware of the extent of joint and several liability. This ignorance might lead to unexpected tax demands and financial liability for providers who were not directly involved in payroll management. Care providers who use employment agencies or umbrella companies for staff, might find themselves liable for unpaid taxes, even if the agency was responsible for handling payroll.
4. Implications for the sector:
   • Financial risks: The care sector faces significant risks when working with external parties who may not adhere to tax laws or payroll procedures.
   • Regulatory scrutiny: Care providers, especially those involved in NHS or local government-funded services, may face scrutiny from HMRC, which could impact their financial sustainability and reputation.
   • Need for due diligence: Organisations in the sector should conduct thorough due diligence when engaging third-party payroll providers to ensure that tax obligations are met properly. This includes ensuring that subcontractors and agencies comply with HMRC rules and regulations.
5. Mitigation Strategies:
   • Contracts and agreements: Care providers should clearly outline the responsibilities for payroll and tax obligations in contracts with agencies, subcontractors, or umbrella companies.
   • Audit and compliance checks: Providers should regularly audit their third-party payroll providers to ensure tax obligations are being met and avoid joint liability exposure.
   • Insurance: Some organisations may explore tax liability insurance to protect against potential tax liabilities that arise from third-party non-compliance.

Conclusion

Joint and several PAYE / NI liability should be considered a key risk for any provider  in the social care sector which relies on third-party staffing. It is crucial for providers to be aware of this potential risk and take proactive steps to ensure they are not held liable for tax debts they did not directly incur. By implementing due diligence processes and carefully managing relationships with third-party providers, care providers can better navigate this complex legal issue.

Join our webinar

To support care providers, Care England is hosting Care England is hosting a webinar on the 17^th March at 2pm with Patrick Curtis, Legal Counsel at Neuven to explain joint and several liability as it pertains to the social care sector.

The webinar will explore realistic scenarios and how providers can protect themselves while continuing to access flexible staffing and offer the opportunity for care providers to ask questions directly.

Understanding the risk now means staying compliant, resilient, and focused on delivering care, not dealing with avoidable legal exposure.

To review and register for the webinar click here: