Under inside IR35 you cannot operate like a business and in fact you pay more tax than employee, because your company cannot for example offset the cost equipment against tax, but employer can do that.
This change is constructed so that heavy penalty is applied only if company assess the contractor "outside" when in fact he or she is working "inside". There is no penalty other way around. That means when this "reform" gets implemented, there will be no market for small independent contractors that offer better rates and quality than consultancies that happen to be party donors.
HMRC falsely claims the IR35 is about tax - since 2017 there is no tax advantage to operate via PSC.
Given how Treasury ignored perfectly valid Lords report about plethora of issues with this ill legislation, I am convinced that there is under the table deal going on. We need national inquiry about what's going on with people behind that and why they push it so hard and don't listen.
If this was a tax issue, they could just raise tax on dividends or make other small changes, without killing the whole market.
Government has no problem when agency worker gets paid small salary + commission, but there is perceived problem when contractor pays small salary + dividend (that is double taxed). The difference in tax is nulled by the fact contractor has to do full accounting, pay for insurance and do other things employer should be providing. HMRC could just make dividends to be subject to NI and deductible from CT, so it is treated the same as commission.
They won't do that, because the tax will be simplified, inspectors will have nothing to do, and party donor will have to compete with independent contractors and won't make their extra billions.