IT contractors have been warned that the changes made to the taxation system could leave the sector even worse off.

According to the chief executive officer of Contractor Calculator Dave Chaplin, the IR35 tax code is unpopular with IT contractors because it is difficult to navigate and understand - often leaving contractors paying more tax than they should.

Chancellor George Osborne recently introduced the Office for Tax Simplification to look at IR35 and Britain's other troublesome tax codes.

However, Mr Chaplin has now pointed out that as part of the government's austerity drive, any changes must be revenue neutral - therefore generating at least as much tax as they do currently.

"Because the tax books must be balanced, a set of simple employment status tests is likely to end up making entry to the 'not employed' club harder than it is now under the existing IR35 legislation," he said.