Insolvency scenario
What happens if the umbrella fails after payday - but before paying HMRC?
Fortis is designed so the relevant agency-funded PAYE and NIC amount has already been directed to HMRC, rather than remaining in the umbrella’s bank account until its normal payment date.
Step by step
The scenario
A single payment run, followed through from funding to failure. The figures are illustrative.
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1 - Agency funding
£100,000
An agency is due to fund £100,000 of gross umbrella income for a payment run.
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2 - Payroll validation
Fortis validates the worker-level payroll and identifies the amount due to the umbrella and the PAYE/NIC amount due to HMRC.
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3 - Controlled split
The agency makes two payments: the umbrella allocation to the umbrella, and the validated PAYE/NIC amount directly to HMRC under the umbrella’s reference.
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4 - Umbrella failure
The umbrella enters administration before the date on which it would ordinarily have paid its monthly PAYE liability.
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5 - Critical difference
The agency-funded PAYE is not sitting in the umbrella’s bank account. The agency has retained evidence of the calculation, payment, reference and worker allocation.
All Liabilities
The difference
What this changes
In a conventional model, the agency may have paid the full gross umbrella income downstream and then rely on later monitoring to confirm that the umbrella remitted the tax. If insolvency intervenes, the tax element may form part of the cash lost within the failed business while the JSL exposure remains.
With Fortis, the tax payment is addressed as part of the payment run itself. The scenario still requires correct data, calculation, payment and allocation, but the agency-funded PAYE is not exposed to the umbrella’s banking or insolvency position in the same way.
This scenario is illustrative. Outcomes depend on complete and accurate data, correct operation of the agreed workflow, successful payment and allocation, and the treatment of any later corrections or HMRC assessments. Fortis does not provide legal or tax advice.
Next step
Ready to move from monitoring to control?
See how Fortis validates each payroll, separates the relevant PAYE and NIC liability and gives your organisation the evidence needed to show what was calculated, paid and reconciled.