The High Court has ruled against an IT consultant who was fighting a £99,000 tax demand for work he completed on behalf of motoring organisation the AA.
The Professional Contractors Group (PCG), which represents UK IT freelancers, has expressed its shock at the judgement, which it said could have major implications for other consultants.
The "Dragonfly" IR35 case involved PCG member Jon Bessell, the owner of Dragonfly Consultancy. He is now liable for £99,000 in tax.
Speaking after the judgment was delivered, he said, "I am devastated by today's news. Not only does it affect my family and me, but all the other freelance professional consultants who are trying to earn an honest living.
"I was never an employee of the AA and I simply cannot understand how the High Court has reached its decision. It is a travesty of justice."
The judgement found that Bessell was technically an employee of the AA when completing IT projects for the organisation, and that he was therefore liable for the £99,000 tax demand.
The Professional Contractors Group supported Bessell in bringing his appeal because of the potential wider implications of the case.
PCG managing director John Brazier said, "This is a potentially massive blow to freelancers throughout the country. This case threatens the long-established defences against IR35.
"We will be looking at the judgment in very close detail to work out its full implications."
The Professional Contractors Group will be publishing further guidance on the consequences of the judgment shortly, he said.
