The Story of Unified Payroll

Unified Payroll was an umbrella company, providing services to contractors. It had a glitzy, professional looking website, and said all the right things on the phone or by email. They talk about how they're "compliant" and go on to say how they have experts and are constantly keeping within guidance etc.

For what ever its worth, we looked at them and thought they looked pretty honest. There's no suggestion (from the outside) that they were trying to do anything shady, and certainly had none of the hallmarks of an organisation who might "do whatever it takes, no matter the cost". We reckon they were pretty honest and were genuinely trying to do a good job.

Some screenshots of their website:

• Home Page
• About
• Compliance

Due Diligence

We also did some due diligence and looked at their accounts filings at Companies House. Even here, things look pretty decent - they'd been trading a couple of years, had a reasonable looking "SIC Code" (ie. they were telling Companies House they were doing payroll work, so weren't trying to hide their true nature). They'd been filing all the right documents on time, etc.

Looking into the documents themselves, we saw that they had one director, who was a British national, and had a contact address in Essex. We looked that up on Google Maps, and sure enough, it's a residential address - so it doesn't look like the director was actually based abroad and pretending to be British. This all checks out, and gives us more good feelings about them.

Next we took a look at their most recent accounts, correct to 31st December, 2019. They show assets of £590,000 (approximately double what it had had the year before) - both an impressive amount, and also impressive growth. There were an average of 840 employees (up from about 500 the year before), again impressive (and remember it includes people working for the company and the contractors).

The stand-out thing in the accounts was that they seemed to owe £506,000, leaving them with just £84,000 "in the bank". This on its own isn't necessarily a problem - the accounts are just a snapshot in time, and an umbrella company is necessarily a business that needs to collect money from clients and pay it to contractors. However, the comparatively small amount of money "in the bank" compared to those debts is a potential for concern because if (say) a quarter of the money they're owed doesn't materialise, then they don't have enough to pay their debts. That suggests they could have cashflow issues, which if such a situation were to persist for a few months may oblige them to declare liquidation/bankruptcy.

Liquidation

The filings also tell us that by 28th October, 2021, Unity Payroll had gone into liquidation ("gone bust"), and was in the hands of an administrator. Numerous contractors had worked the hours, had their timesheets signed off, and were awaiting payment - which never came. Those contractors would have to wait for the administrator to pay other people (including HMRC) before they'd even think about paying out the money owed to contractors. By then, there wasn't enough money to go around to everyone that was owed.

It's worth pointing out that at time of writing, Unity has been in liquidation for nearly a month, but their website makes no mention of this, and still has a "sign up" link. Liquidators/administrators aren't obliged to publish their existence or indeed the work they're doing on the website.

Summing Up

What we can learn from this (now failed) umbrella is that:

• It is important to do some due diligence on any umbrella - you cannot know what is going on "inside" an umbrella from looking at their website, or from Internet reviews
• Umbrella companies can, and do, fail - when they do so, the contractors working through them don't get paid on time - if at all.
• You can learn a lot about the financial stability of an umbrella company by looking at their accounts filed at Companies House