Bill Hood, a freelance contractor, whose company is Usetech Limited, lost his chance to overturn the ruling but did not attend the appeal in London due to ill health.
He started his business as an oil rig designer in 1996, abandoning it last year after suffering a severe heart attack.
The first hearing of his case, by the Special Commissioners, took place in the living room of his Gateshead home, rather than in a courtroom.
PCG chairman Dr Simon Juden said: ‘Once again we witness the lottery of running a small business. In this case, Bill had negotiated his contract for services with the agency, but for reasons of commercial confidentiality, had not seen the “upper contract” between the agency and the end client – a quite normal state of affairs.
‘It is extremely unfair and unreasonable that people who choose to run their own businesses should have to face constant uncertainty about where they stand in relation to their tax.
‘The size of his tax bill was found to be dependent on a document that he had neither signed nor seen. This surely offends common sense.’
The revelation comes only a week after the Revenue won its long-running case with Geoff and Diana Jones of Arctic Systems over Section 660, better known as husband and wife tax.
The couple and the PCG are still considering an appeal.
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