The use of retrospective rulings for taxation issues could impact on IT contractors, an organisation has warned.

John Whiting, tax policy director at the Chartered Institute of Taxation, has warned that this practice by HM Revenue and Customs (HMRC) can damage the certainty which must be central to a system of this type.

He said this has a knock-on effect to both the reputation of the system and its fairness, which could concern IT contractors.

While he acknowledged the need for the government to sometimes clarify the meaning of a piece of legislation, he said this must be a cautious decision used rarely.

Mr Whiting stated; "It must not dislodge the principal that the taxpayer is taxed on the wording of the legislation in place at the time of their actions. We are taxed on what legislation says, not what HMRC thinks it says."

In other tax news, IT contractors who have recently formed personal limited companies in the Sutton area could attend a seminar being run by HMRC in the area designed to improve organisational knowledge of tax.