Umbrella company contractors have put in claims for around half a million pounds worth of unpaid invoices following the collapse of Albany at the beginning of 2010.

Administrators have warned that it will take some months yet before they start going through claims from contractors; a statement which will no doubt depress the 100 or so contractors who are owed money.

In February, five of Albany’s companies in the UK went into administration. The decision came after RBS Invoice Finance withdrew a factoring facility worth £3 million. The affected companies were Albany Employment Services, Albany EMEA, Albany Holdings, Albany Management UK and Albany Technologies.

John Alexander, from Carter Backer Winter, said the administrators were aware that about 100 contractors were claiming about £500,000 and another 20 creditors, including HMRC, were claiming another £4.6 million.

Before the contractors claims can be processed, a forensic examination of Albany’s accounts has to be undertaken by IT experts. This is expected to take some months as the administrators have only just received full access to the company’s accounts.

CBW said in September that it did expect some money to be left after RBSIF was paid the money owing to it.

Albany had at one point employed about 300 people in this country but by the time it fell into difficulties the workforce had reduced to around 150, which included both freelancers and staff. The foreign subsidiaries of Albany were not affected by the UK insolvency and are all said to be profitable and sound.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: At the station by James Jordan

The exchequer secretary to the Treasury, David Gauke, says that the government is determined to improve the system and introducing real-time information could reduce some of the administrative burdens on employers.

Under the current system, at the end of every tax year, businesses – including umbrella companies – have to spend time processing and distributing employees’ P60 documents. This a time consuming task and software technical support lines are often jammed with employers asking for advice on how to comply with government requirements. With real-time information, this onerous task would no longer be necessary; annual employer returns will be phased out and both HMRC and employers will benefit from reduced admin costs.

The new system will also mean that HMRC will be able to update its records automatically when a worker changes jobs.

As well as hearing the views of employers, HMRC would also welcome contributions from the payroll industry and software suppliers. The acting director-general of personal tax at the Revenue, Stephen Banyard, said that HMRC aims to work closely with customers during the development of the new system, which is due to be piloted from April 2012.

There is bound to be concern in some quarters over these changes. HMRC has not enjoyed favourable media coverage this year. The coding debacle earlier this year resulted in a large number of people receiving incorrect tax code notices and just recently the Revenue was criticised for sending out demands for repayment of rebates it had sent out earlier this year in error.

Although employers are likely to welcome a reduction in administrative work, HMRC must ensure the real-time information system is reliable and safe before it is forced on everyone.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: paranoid polaroid by Andrew Mason

The Recruitment and Employment Confederation is urging contractors who are owed money from umbrella companies that have gone into administration to contact the administrator in order to obtain settlement for outstanding invoices.

In the case of contractors who had a working arrangement with Albany, the administrator is Carter Backer Winter who will be writing to each worker directly regarding the current situation.

Fiona Coombe, director of professional services at the REC, said: “Ultimately in the case of umbrella arrangements it is the choice of the worker as to who employs them.”

She also advises recruiters to conduct further due diligence on umbrella companies in light of the recent collapse of Albany.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Bassett Begging by Let Ideas Compete