Court ruling 'could impact contractors' tax burden'

Date: 10th September 2008

A recent ruling about the tax paid by a small business in the UK could threaten the country's justice system, one expert has warned.

Dave Chaplin, the chief executive of ContractorCalculator, said that the high court's ruling on the Dragonfly Consulting appeal could prove to be a "fundamental blow" to the British legal system.

He explained that the decision effectively removes the rights of flexible highly-skilled UK contractors and their clients to settle on their working relationship.

In the case, Jon Bessell, the owner of Dragonfly Consultancy, failed to have a tax demand for £99,000 overturned.

"This ruling basically means HMRC and the Treasury will be able to raise additional tax revenues where they see fit, resulting in increased fears by any contractor that they could be targeted for an investigation and be forced to pay back taxes, national insurance contributions and, adding insult to injury, penalties," Mr Chaplin explained.

"The Dragonfly ruling has the potential to be another nail in the coffin of flexible working in the UK, by an administration that simply does not get the concept of a highly reactive and skilled workforce that has brought so much prosperity to the country,” he concluded.