In an important decision, the Court found that a "self employed" IT contractor was really an employee and owes more than £99,000 in back tax as a consequence.

Mr Bessel, who was freelance, or thought he was, has been ordered to pay the tax as he worked almost exclusively for the AA for three years and just had one other client. He was so involved with the AA's business, he was an employee. The man paid for his own equipment, broadband line and training but that was not enough to classify him as self-employed. There was no express provision in the contract between the AA and the company through which Mr Bessel contracted nor in the agreement between him and that company which would allow him to substitute another person to undertake the work. Whereas if, say, a law firm is hired it will usually be up to the firm which lawyers they put on the job and they can change them largely at will and the relationship is not one of employer and employee.

The judge said: "Bessel's performance of his duties was subject to a degree of supervision and quality control which went beyond merely directing him when and where to work. In the case of a skilled worker you do not expect to find control over how the work is done. Conversely, in the case of a self-employed worker in business on his own account... you would not normally expect to find regular appraisal and monitoring of the kind attested to".

Control and the right to substitute others to do the work have always been important elements of the so-called "badges of trade" which help indicate if someone is self-employed or not.

We can advise you on whether you are employer or self-employed and seek to ensure that your contractual arrangement reflects the correct working practice under these rules, known as IR35, which applied in this case.

If you would like us to check your contracts with consultants and employment agencies following this ruling please call Danny Hockman on 01494 535321.