There are potentially two types of contract
with an IT Worker.
The first is the lower level contract. This is the contract that you, the IT Director or Manager has agreed on behalf of the company you represent with the worker. This contract can be verbal or in writing. For a contractor to fall ‘outside’ IR35 and pay their own taxes the contract will need to meet certain criteria to satisfy HMRC understanding that they are entitled to work outside IR35.
The second contract that may exist in conjunction with the lower level contract is an upper level contract. This contract is between the recruitment agency and the client. This contract can be of critical importance if HMRC where to challenge a contractor on their IR35 status and the company using their services.
