Dragonfly IR35 defeat has agencies pushing IT Contractors towards compliant Umbrella Companies


Umbrella Companies

According to Umbrella Companies that we contacted the Dragonfly Consulting case will send IT Contractors away from Limited Companies towards Umbrella Companies.

Of course, you could say they would say that, but it does seem to make sense.

No contractor wants to get a sudden bill of £99,000 from the taxman like Job Bessell of Dragonfly Consulting did.


According to a spokesperson for leading Umbrella Company Danbro, contractors are now selecting the bigger and safer Umbrella Companies too.

Few are taking chances with the more dodgy brollies. The savings may seem good but not if you are suddenly bagged by the taxman for a whole heap of back taxes etc.

According to Danbro, agencies are taking the same view.

The Managed Service Company legislation means that in some of the dodgier schemes if HMRC can’t get the tax from the contractor or the Managed Service Company then they can bag it from the agency.


Agencies are not keen on that happening, to put it mildly, and so are only using the compliant Umbrella Companies like Danbro themselves who have stamps of approval from both HMRC and Professional Passport.

Indeed they have just been nominated for an award at the Accountancy Age Awards in the Small Firm of the Year section in the category Best Use of the Internet : Practice.

Excellent Year

Partner at the firm, Damian Broughton explains: ‘2008 has been an excellent year for Danbro so this nomination really is the icing on the cake. We have not only been enjoying national success after opening up our London branch, we have also received stamps of approval from HMRC and Professional Passport, been ranked one of the fastest growing private companies in the UK and continued our close working with PGC (Professional Contractors Group).

‘This nomination demonstrates the dedication shown by the whole Danbro team and I am looking forward to hearing the final results on the night.’

The Accountancy Age Awards ceremony is being held on 12th November at Battersea Park Arena.

For more information contact Danbro Head Office on 01253 600140, Danbro London Office on 0207 836 8400.

Best Month

Another question that I threw in to Danbro concerned the IT Contractor market.

All the evidence from agencies reporting is that the IT Contractor market is still doing very well despite the credit crunch.

It’s always pointed out when we put these pieces of good news forward that banks are laying off contractors and that Jobstats is saying that the number of job ads is down.

Asking the Question

So, I thought it was worth asking another company in the real world what the situation was.

Are agencies deliberately fooling the Stock Market with wrong figures as one reader suggested?

So, I asked a Danbro spokesperson what the Umbrella Company market is doing.

It seems that Danbro themselves are leaping ahead and have taken on lots more new staff.

Best Month

They also told me that they had record numbers of new contractors in July and that it was their best month in what has been a very good year for them.

I got the impression from them that the Umbrella Company market as a whole was still holding up well, although Danbro is taking a greater market share.

So, that’s good news on two fronts, i.e. from those companies who would be best placed to know how the IT Contracting market is really doing, agencies and Umbrella Companies.

Let’s hope that this continues and that the new future for the IT Contracting industry is that we are in a recession-proof profession.

Touch Wood!