Contractors face tax chaos after IR35 ruling

The current legal challenge to the controversial IR35 tax rules may only affect IT contractors, though the ruling affects many other groups of self-employed contractors.

If the legal challenge succeeds, but only on behalf of IT professionals, the Inland Revenue faces the tricky problem of specifying exactly who is and who isn't an IT professional.

The Professional Contractors Group, which is bringing the legal challenge, hopes to present evidence tomorrow which will extend the scope of its case to all groups affected by IR35.

However, their main argument, that IR35 unfairly discriminates against smaller contractors who are effectively in competition with large ones, may be difficult to extend to include engineers, medics and builders.

The hearing will be extended until at least Monday, for the Inland Revenue's arguments to be heard. Both councils in the case have cleared their diaries in a bid to conclude the case before the end of the financial year.