UK payroll services providers could face system lockouts if they fail to register as tax advisers with HMRC by 18 November 2026. Following a landmark announcement this week, HMRC has introduced the requirement for anyone providing tax advice or interacting with the department on behalf of third parties, sparking a scramble for clarity across the payroll sector. 

The move means that any external business interacting with HMRC on behalf of a client must meet strict new eligibility criteria and register for an Agent Services Account (ASA). 

Industry bodies like the Association of Taxation Technicians (ATT) have voiced concerns over the speed of the rollout, noting the lack of clarity for firms over remaining compliant. For the UK’s SME community and the payroll bureaus that support them, this isn’t just an administrative update; it’s a significant regulatory hurdle. 

So, what exactly does it mean for your day-to-day operations?

What Is the HMRC Agent Registration Requirement?

To understand the weight of these changes, it’s worth looking at the new definitions of professional representation being set by the Government. 

The new, mandatory HMRC agent registration process concerns individuals and businesses providing tax services – including payroll – to clients. Previously, many providers operated without a formal ASA, often using client credentials to manage PAYE. 

Under the new rules, HMRC is tightening the net to ensure anyone acting as an intermediary is supervised for Anti-Money Laundering (AML) and meets specific transparency requirements. If you aren’t on the register, you’re effectively locked out of the system.

Who Must Register as an HMRC Agent?

The requirement depends on whether you’re an internal department or an external service provider. HMRC’s guidance, published on 17 February 2026, clarifies that any legal entity paid to interact with HMRC on behalf of another person’s tax affairs is considered a “tax adviser” under these rules.

Key Dates and Deadlines

• 17 February 2026: Requirements officially announced.
• 18 May 2026: Early voluntary registration opens.
• 18 November 2026: Mandatory registration opens for payroll-only providers.
• 17 February 2027: Final deadline. You cannot act as an agent after this date if unregistered.

What Constitutes ‘Relevant Individuals’?

HMRC will carry out checks on specific people within your business known as “relevant individuals”:

• Businesses with five officers or less: Every officer (directors, partners, or equivalent) is treated as a relevant individual. You must tell HMRC about all of them, regardless of their daily role.
• Businesses with six officers or more: You must disclose all officers involved in tax activities, plus senior managers who play a “significant role” in managing these services. You must nominate at least five people.

Does Your Business Satisfy AML and Tax Compliance Conditions?

To successfully register, your business and relevant individuals must meet several strict “minimum standards.” Crucially, you must be registered for AML supervision before you begin your HMRC agent registration.

1. AML Supervision: Evidence your business is supervised for Anti-Money Laundering

• The Professional Path: Use this if you are already a member of one of the recognised supervisory bodies (list here).
• The Independent Path: If you’re “payroll-only” or not a member of a professional body, you must register directly with HMRC’s Economic Crime Supervision

2. Tax Compliance: No outstanding tax returns or unpaid tax for the business or individuals (unless a formal Time to Pay arrangement is in place).
3. Clean Record: No stop notices, anti-avoidance sanctions, or unspent convictions for fraud or money laundering.
4. Director Status: Relevant individuals must not be disqualified from acting as a director in the UK or overseas.

How Do I Register?

Completing registration is less about a single form and more about compliance checks. While the Government’s guidance has yet to include a section on how to register at this stage, there are steps you can take (some of which have been outline above) to avoid issues. 

• Verify your AML status: Before opening the portal, you should have a valid supervision number. Those on the Independent Path should apply for HMRC Economic Crime Supervision at least three months in advance to ensure their number is live.
• Audit your Relevant Individuals: Gather the National Insurance numbers and UTRs for the officers identified in your earlier audit. A single director with an outstanding personal tax return can block your entire firm’s application.
• Access the ASA portal: From 18 May 2026, the digital route opens. Existing agents won’t need a new account but must submit a “Re-verification Declaration” to prove they meet the new standards.
• Finalise your Agent Reference Number (ARN): Upon approval, your ARN becomes your license. Without an active status by February 2027, HMRC’s lockout will trigger, automatically revoking your access to PAYE and CIS systems.

What Happens If You Don’t Register?

While there’s a lot for businesses to get to grips with, understanding how to avoid potential pitfalls is incredibly important.

HMRC has signalled a “zero tolerance” approach to those who miss the deadline, but for most bureaus, the concern isn’t just about the fines – it’s about the impact on day-to-day operations and your professional reputation.

If you aren’t registered by February 2027, the first thing you will likely notice is a system lockout, i.e. a total loss of access to the online portals you rely on to file for your clients. Beyond being unable to do your job, the financial hit is also significant, with initial penalties starting at £5,000 for operating while unregistered.

Perhaps most damaging of all is the mandatory disclosure rule. If your registration is suspended or you’re caught without one, you’re legally required to notify every client on your books within 30 days. Failing to keep your clients informed carries an additional £5,000 penalty for every individual client you have, a penalty that could easily lead to a financial and reputational crisis – unless it’s avoided with early preparation.

Kevin Fitzgerald, UK Managing Director for Employment Hero, points out just how disruptive the sudden shift could be for businesses. 

He says: “We are hearing from our Bureau partners that this change is going to be costly for their business, especially concerning fees for Anti-Money Laundering (AML) supervision and the admin burden of conducting ‘know your customer’.  

“Whilst AML is understood and appreciated, the burden is especially concerning for smaller owner operators.”

How Should Your Business Prepare for the 2027 Deadline?

While the 2027 deadline may feel distant, the scale of internal auditing required – particularly for firms with multiple directors or complex senior management structures – means the window for preparation is already closing. The shift from a voluntary to mandatory framework signals HMRC’s intent to bring payroll in line with other highly regulated financial services.

For payroll bureaus, the coming months should be focused on two priorities: ensuring AML supervision is current and conducting a thorough “tax health check” of all relevant individuals. Those who wait until the November 2026 portal opens may find unexpected hurdles that take longer than the three month transition period allows.