Payroll teams feel ready but JSL exposes data gaps

Payroll teams say they are ready for Joint and Several Liability (JSL) reforms due in April, but new research points to gaps in access to HMRC payroll data and weaknesses in payroll systems.

A survey of 342 finance professionals involved in payroll found that all respondents felt confident their organisation was prepared for the changes. However, 60% said they needed greater visibility of payroll data held by HMRC, and 28% said they still lacked clarity on the new requirements.

JSL gives HMRC greater powers to hold agencies and end clients jointly liable for unpaid tax and National Insurance contributions within labour supply chains. The reforms increase the need for accurate records and clear audit trails across the parties involved in engaging workers.

Data visibility

Limited access to reliable payroll data was a common concern, particularly among mid-sized employers. Among organisations with 250 to 1,000 employees, 72% said data visibility was the biggest barrier to readiness, making it the most frequently cited issue in that segment.

Larger employers reported a different set of challenges. In organisations with more than 1,000 employees, respondents were more focused on whether existing technology could meet tighter compliance and audit expectations. Uncertainty about the reforms also remained a factor for this group.

Finity, which commissioned the research, said the findings highlighted a gap between confidence and operational readiness. It said JSL increases the need to connect data and processes across organisations and their supply chains.

Legacy systems

Technology constraints featured heavily in responses. Nearly half of participants (47%) cited outdated or disconnected payroll systems as the biggest barrier to full JSL preparedness. A further 32% said the main obstacle was a lack of automation or reliance on manual processes.

These issues can leave payroll teams reliant on spreadsheets, duplicate data entry, and separate tools for onboarding, time capture, payments, and reporting. Under JSL, such workarounds could make it harder to demonstrate consistent controls and complete records when responsibility for tax and National Insurance liabilities is shared.

The research also suggests ambiguity remains despite the proximity of implementation. The 28% who said they lacked clarity on JSL requirements indicates some organisations are still working out how the rules apply to their labour supply arrangements.

HMRC engagement

Finity said there was strong demand for better access to HMRC data and more connected payroll technology in the private sector. It added that HMRC has been engaging with industry on potential API-based solutions for payroll data access.

Payroll operations in agency and contingent labour markets often span several organisations and systems. This can create delays and reconciliation work when payroll teams need to confirm worker status, tax treatment, and deductions across multiple parties. JSL increases financial exposure when errors occur upstream or when data is incomplete.

Varun Monteiro, Finity's CEO, said the reforms were exposing operational weaknesses rather than complacency.

"What our research really highlights is that JSL is exposing weaknesses in payroll operations, rather than a lack of intent or awareness. Payroll teams are being asked to do more, manage greater risk and provide watertight assurance across supply chains, and while they are taking JSL seriously, many feel held back by fragmented data, limited visibility and technology that was never designed for this level of accountability."

He said organisations also want more direct access to HMRC-held information.

"Crucially, there is a real appetite for more transparent visibility of payroll data at source from HMRC, supported by modern, connected payroll systems that can ensure real-time compliance," he said.

Monteiro said compliance would become more continuous under the new model.

"JSL turns compliance into a continuous process, and to do that successfully, the profession must feel confident, not just in the people and processes delivering it, but in the underlying systems and data flows that support them. Without that foundation, organisations risk reaching the April roll-out exposed, even if they feel ready for it," he said.

"With under two months until the reforms take effect, we are urging organisations to review their payroll infrastructure, data access and supply chain processes to ensure they are genuinely JSL-ready. Only those that invest now in connected payroll systems and clearer data visibility will be well-placed to manage risk across their supply chains as enforcement tightens," he added.

Finity said the survey is part of a wider research programme, with further findings on payroll efficiency, technology capability and operational performance due in the coming weeks.