[matthewmacleod]

It is exactly tax avoidance. It is a method of structuring employment such that single-person contractors who are employees in all-but-name get to pay less tax.

Single-person companies are still free to exist, like other companies. What's no longer permitted is employees pretending to be single-person companies.

[NiceWayToDoIT]

By the pattern of your answer I can conclude that you have never been contractor, so you do not know enough about IR35. But fair enough you have huge karma so you can downvote my answer. IR35 has existed for very long time and has relied on determination of who is in or out, liability before was on Limited companies to determine status. Now, government shifted that liability to employers as for the past 10 years they have not got more than handful of cases in the court against those single-person companies. So, employers in fear of heavy fines, are using blanket approach and placing everyone Inside IR35 regardless of their real practices.

IR35 is advertised as fair but in fact it is not as on example of Amazon https://www.theguardian.com/technology/2020/sep/08/amazon-uk...

Those really big are exempted of taxes, you just need to have enough money and good leverage.

Now, why was contracting good in UK? Because short rotation of contact was helping to increase "salaries" (rates). Permanent employees do not negotiate salaries on regular bases, and what I have experienced that they sitting on the same level for years. Natural tendency in capitalism is to maximize profit for shareholders and minimize all expenses in process. Salaries of permanent employees are expense column.

Why is this bad news for all companies, regardless of higher rates, it is easier to discharge contractors. Having very strong unions in UK, that will not go easy with permanent employees. Meaning startups will have issue to find people on short term bases.

And many more things to cut the long story short... Nothing to do with fairness but as Jean-Baptiste famously declared “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

That new IR35 changes are bad proof is decision to delay it for one year because of pandemic...