The Public Accounts Committee condemned ‘widespread non-compliance’ with IR35 tax reforms in central government departments, describing it as ‘not acceptable’ after HMRC ‘rushed implementation of the reforms; provided poor guidance; and public bodies struggled with its tool to assess status’.

But HMRC argued that the IR35 rules have increased tax take, estimating that there was a net increase in tax revenue of £250m during the first year of the reform, and an additional 50,000 individuals put on payroll during the first two years. This was expected to increase to £275m in the second year.

Departments had only two months or less to get to grips with HMRC’s new guidance and tools before the new rules came into effect in April 2017, the PAC report said. There were also problems with the guidance and Check Employment Status for Tax (CEST) tool.