The chief executive of HMRC, Jim Harra confirmed in a Public Accounts Committee (PAC) hearing that if a public sector body fails to follow the IR35 rules then the tax bill goes to the department and not the contractor meaning that the bill is covered by the taxpayer.

The oral evidence session on Monday, chaired by Dame Meg Hillier MP, focused on the lessons learnt from the implementation of IR35 reforms in the public sector and featured first-time PAC attendees Nicole Newbury, HMRC director for wealthy and mid-sized business compliance, and Pete Downing, deputy director employment status and intermediaries.