Revenue issues IR35 guidelines.

The Inland Revenue has issued a draft report on which IT contractors will be hit by the IR35 tax reforms.

The guidelines, which have been passed on to tax experts and contractor groups for comment, look at three hypothetical contractors: one affected by IR35, one not, and a borderline case. For example, the latter works in an employer's office for 40 hours a week, and is extensively managed in her job. She is spared the higher tax because she works for additional clients from home.

Chartered accountant Tim Warr said things look good for those with multiple jobs, although this accounts for only a few freelancers. However, Warr said the guidelines lack clarity. 'I think three examples is not very helpful - they could do with a dozen,' he said, adding that guidance on project managers, those with specialised skills, and more details on those working from home should be added.

Susie Hughes, of the Professional Contractors' Group, said there will be years of confusion for borderliners because of a lack of case law.

IR35 impact guidelines: www.inlandrevenue.gov.uk/ir35/draftgn.htm