TRIBUNAL WATCH: MYPAY LIMITED UMBRELLA LOSES APPEAL FOR £616,937 TAX AND THE SUPPLY-CHAIN WARNING IS GETTING LOUDER

The First-tier Tax Tribunal decision in MyPay Limited v The Commissioners for HMRC [2026] UKFTT 807 (TC) was heard between 9 and 11 March 2026 and published on 2 June 2026.

MyPay Limited lost its appeal and now faces an income tax bill of 616,937.

The dispute concerned claimed expenses for the tax years 2014-15 and 2015-16, with HMRC determinations made in 2019 and 2020. Similar arguments have already been tested in previous umbrella-company tribunal cases, including Mainpay and Exchequer Solutions, where the umbrellas also lost.

The issue is not just whether expenses were processed. It is whether the underlying employment and assignment structure actually supports the tax treatment being claimed.

If workers move from assignment to assignment and there is no genuine continuing employment relationship between those assignments, HMRC and the Tribunal may treat each assignment as a separate employment. That can make the assignment location a permanent workplace for tax purposes. If that happens, travel from home to that site is ordinary commuting and ordinary commuting does not qualify for tax relief.

For years, many agencies and end clients have been told that umbrella arrangements are "handled" by the umbrella provider. Payroll is handled. Expenses are handled. Compliance is handled. Accreditation is handled.

The MyPay decision shows why that is not enough.

HMRC is not interested in comfort language. The Tribunal is not interested in labels. They look at the reality: what actually happened, what the contracts achieved, whether the employment relationship genuinely continued, whether the expenses were allowable, and whether the tax treatment matched the facts.

That should worry every recruitment agency, labour supplier and end client that relies on umbrella companies without holding its own evidence file.

Because the direction of travel is clear. The risk is moving up the chain.

From April 2026, agencies and, in some cases, end clients face greater exposure where umbrella companies fail to operate PAYE correctly. That means today's umbrella-company failure may not stay neatly inside the umbrella company. If PAYE, expenses, holiday pay, worker status or deduction treatment is wrong, the question for agencies and end clients will become: what did you check, what evidence did you hold, and why did you believe the arrangement was compliant?

The accreditation point makes this even sharper.

According to the Tribunal Watch note, MyPay Limited was still listed on the SafeRec umbrella list on 26 June 2026, three weeks after the published decision, although it was no longer listed by 28 July 2026.

The same note says MyPay remains listed on the FCSA umbrella list, while Professional Passport does not list it.

That raises a serious commercial question. If a provider can lose a tax tribunal appeal for 616,937 and still appear on an accreditation list after the decision is published, what exactly is an agency relying on when it says "they are accredited"?

This also exposes a deeper weakness in the payroll accreditation market. FCSA, SafeRec and Professional Passport may present themselves as assurance bodies, but they are not HMRC and they are not a substitute for tax law, tribunal decisions or real operational testing.

If an umbrella provider can be accredited, listed, or recently listed while a tribunal decision of this size sits in the background, then the industry has to ask whether these bodies are strong enough, fast enough, and technically close enough to HMRC's position to protect agencies and end clients from real exposure.

Being on an approved or accredited list should never be treated as proof that expenses, PAYE, holiday pay, worker status or umbrella processes are being managed correctly.

This case shows the gap between badge-based comfort and HMRC-tested compliance.

Accreditation may form part of due diligence. It cannot replace due diligence.

A logo on a list does not prove the expense model is safe. It does not prove the PAYE treatment is correct. It does not prove holiday pay is handled properly. It does not prove workers are genuinely employed between assignments. It does not prove the agency or end client has a defence if HMRC later follows the money up the chain.

Agencies and end clients should now be asking harder questions:

Can we map every umbrella and intermediary in the supply chain?

Do we know exactly how expenses are being treated?

Are travel and subsistence claims being checked against the real working pattern?

Are payslips, deductions and assignment rates being reconciled?

Do we hold PAYE evidence, not just supplier reassurance?

Do contracts match actual working practices?

Are accreditation statuses being monitored after tribunal decisions, investigations or adverse findings?

Can we evidence our review if HMRC asks?

The lesson from MyPay is not simply that one umbrella lost one case. The lesson is that umbrella compliance risk is real, historic, expensive and increasingly visible.

The businesses that treat umbrella payroll as "someone else's problem" are exposed. The businesses that build proper control files now will be in a far The question is not: "Is the umbrella on a list?"

The question is: "Can you prove the arrangement is compliant when HMRC tests it?"