Contract Spy reviews the current IR35 legislation for potential advantages to IT Contractors

Contract Spy reviews the current IR35 legislation for potential advantages to IT Contractors

As the legislation is currently drafted (Jan 2024), smaller companies as defined by the Companies Acts do not have the responsibility of determining the IR35 status of contractors they hire. This means that contractors engaged with small companies continue to be responsible for correctly determining their own IR35 status, as they did prior to the off-payroll legislation which affected the private sector in 2021. Consequently, finding contracts with these companies continues to be highly sought-after by contractors.

Contract Spy often features direct contract opportunities with start-ups and smaller companies that are often difficult to find for contractors conducting their own searches. There are many reasons for this. Opportunities with smaller companies are often only advertised on the company's own website and the smaller job boards, or are only advertised for a limited amount of time due to restricted budgets. Since its formation in 2016, Contract Spy has built up an unparalleled database of these smaller companies that use IT Contractors on a regular basis, and a large proportion of our discovered vacancies continue to be with this important sector of the economy.

In Q4 2023, Contract Spy has found contracts advertised by the following companies in the small company sector;

·         Fluid EM

·         CloudStratex

·         The Data Shed

·         OpenClassrooms

·         Start With Data

·         The Property Shooter

·         CE Back Office Solutions Ltd

·         Peppy

·         MyTime2

·         The Search Equation

·         Pulse8

·         Simply Start A Biz

·         Musicians Inc

·         Kasookoo

·         Myrge

·         WeShape

·         MPM Wristbands

·         Academic Tutors Online

·         NearForm

·         WiredHub

·         SCIS

·         FreeWheel

·         FCOMS UK

·         Breakthrough Communications & Strategies

·         Opteran


Whilst only the companies themselves will be able to confirm their small company status to the Contractor on engagement, Contract Spy believes that, based on their declared number of employees, these companies stand a good chance of fitting the requisite small company profile as defined by the legislation.

The full definition is in section 382 of the Companies Act 2006. The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements:

  • Annual Turnover not more than £10.2 million
  • Balance sheet total not more than £5.1 million
  • Number of employees not more than 50

Should contractors undertake assignments with smaller and start-up companies, it is important that they should prepare a contract agreement to help protect themselves in their commercial dealings, as smaller organisations may have limited experience in hiring contractors. Our direct contract template is an ideal start point for this, as it has been drawn up with direct contracting and IR35 in mind, and is suitable for customisation for smaller company contracts. The template is available free of charge and on request, to any Contract Spy subscriber who successfully finds a contract through our service.

Contract Spy believes that under the current IR35 legislation, it remains vital that all Contractors continue to assert their independence from agencies, and maximise their chances of maintaining their status outside of IR35 in order to fully realise the benefits of contracting.