Chancellor Gordon Brown’s pre-Budget report could herald yet more tax increases for contractors, according to IT contractor specialist giant group.

Matthew Brown, giant’s managing director, believes that a discussion paper titled ‘Small companies, the self-employed and the tax system’ is “ominous” for the industry.

The government paper has invited comments on segmenting owner-managers of companies from other company owners for tax purposes.

Brown said: “The suggestion appears to be that further tax differentiation between owner-managed companies and other companies is necessary, which raises the possibility of something along the lines of national insurance contributions on closed company dividends.”

He believes that the consultation is “perplexing” because owner-managers are already differentiated from other company owners by IR35. The paper is intended as an open, ongoing discussion with small businesses.