@AC
What do *you* think is the clearest definition of a contractor? I assure you that in the eyes of companies, contractors, and mortgage/finance companies who deal with contractors, the fact that you could be out on your ear next week with no notice is *THE* biggest factor. Thankfully this decision recognises that fact, unlike some previous bullshit decisions taken unilaterally by HMRC.
You might also think about things like paid sick leave, paid holiday, pension contributions, death in service benefits, health insurance, etc, etc. All of which are commonly provided for employees, and none of which you get as a contractor.
"Legally unenforceable"?! I think not. Back in October 2008, this is precisely what happened to me. The company I was working for lost a couple of contracts, so they had permies who needed something to do. Result: all the contractors were slung out at the end of that week. The following 4 months without a contract (remember that the economy was in the crapper and no-one was hiring) were a bit of a worry, but as a contractor I knew this was just how things were, and I didn't (still don't) consider it unreasonable. Unlike permies who think they're in a job for life, and then scream blue murder when an unprofitable department gets closed down.
Yes, there's the NI loophole. But would *you* volunteer to pay tax you weren't obliged to? Have you ever reclaimed PAYE when HMRC got it wrong? In that case you can take your hypocrisy elsewhere, thanks.
HMRC have spent hundreds of millions of pounds chasing this, and got (at most) tens of millions back. It would have been much cheaper to make better tax law, but that's not how we roll at HRMC, oh no.