Re: > Just the first stage
"it's a tax dodge."
I'm not too sure to whom you were replying as you didn't quote. But if it was to d3vy pointing out that Ltd Co vs self-employment was a tax dodge then you're wrong. The Ltd Co approach was forced because of IR* rules about tax defaults by self employed settling on the next link in the chain: the agency** or, in the case of direct contracts, the client. Having the contractor work via their own Ltd Co removed that liability. There seem to be areas where self employment still seems to be the norm but in general most clients are liability-averse.
There's also the point that the contractor is taking on risk. Imagine you're a manager in a large IT dept (or oil or any other area). You have a certain amount of more or less fixed workload for BAU plus a variable workload for projects or even seasonal fluctuations for BAU. How do you staff it? Even trying to budget for the fixed workload is problematic, people take sick leave, parental leave, holidays or sometimes just quit or retire. Add to that the project work & you are really exposed to risk. If you have a staff level set on the basis of hoping for the best you take the risk of being understaffed immediately someone is off or a new project arrives. If you set some higher staff level you take the risk of sometimes paying salaries to people for whom you've currently no work.
Your best solution is to add some freelancers into the mix. That means that if you have a surplus you can get rid of them quickly without redundancy payments and if you need more the recruitment process is usually much faster than recruiting permies, especially if you can keep HR out of the loop. The crux of this is you have transferred the employment risk to the freelancers.
Now the freelancer is carrying some of their clients' employment risk. This is a very different situation to the employees alongside whom they will be working whilst on contract. They are not employees, they are businesses, taking business risks like any other business and this is why, irrespective of whether they're a one-man band or a Crapita-scale giant they should be treated as such.
None of this, it seems, stops permies complaining about tax dodges. But, I ask, why do they say this whilst not jumping on the bandwagon themselves? Are they too high-principled to embark on similar "dodges" or is it possibly that they don't want to take on the risks?
* As it was then, this pre-dates HMRC
** This prompts a thought. If Uber etc are presenting themselves as an agency then maybe this puts them on the hook for defaults by their employees independently contracting drivers.