20 years ago HMRC introduced IR35 rules. In April 2017 legislation was introduced for the public sector, making employers responsible for determining the tax status of their contractors who work through a limited company. From 6 April 2020 legislation requires large and medium-sized private companies to do the same. This will affect thousands of companies and up to 230,000 freelancers/contractors. Companies and recruitment agencies will be liable for unpaid tax if HMRC finds a worker has been wrongly classified.

A) Explain why IR35 rules were developed.

B) Explain why these changes are being resisted by both private employers and contractors.