Not just a UK issue
How to deal with people who don't have a "traditional" full-time job seems to be something that other governments struggle with too and it's interesting to observe their different motivations. In the UK the focus seems to be on the recovery of tax from the contractor and there is seeming indifference to the lack of employment rights that results. In Portugal, the motivation seems to be to prevent temporary contractors undercutting full-time employees and undermining their rights. One consequence is that if at the end of the year it transpires you've made more than 80% of your income from one client, that client gets lumbered with a social security contribution on your behalf; there are also significant restrictions on temporary and part-time contracts.
I'd be interested to know if there are examples of good practice. There seems to be an increasing desire for at least a proportion of people to work more flexibly and it's something employment law/taxation ought to be able to accommodate rather than view as problematic.