OK. The BBC.
I heard a poor BBC accountant interviewed on the Today programme by, I think, John Humphreys, and I felt really sorry for him. He was thrown to the dogs.
I need to give you some background here, to put what happens into context.
Generally speaking, it's very easy to tell if someone is employed or not. A contract of employment is usually a give-away.... It's also often easy to tell if someone is self-employed. Working for a number of different customers, flexibility over working arrangements accepted, etc.
However some people who were in employment decided that they didn't want to be employees any more (and this started in the IT sector in the early '80's, I think for cultural reasons). They didn't want to work office hours, or wear a suit, or commute, or be answerable to their boss. So they decided to strike out on their own.
Incidentally, there were tax advantages to being self-employed too - you paid tax through your tax return after the year end, rather than PAYE in real time, and you had lower NICs. There were disadvantages too - no paid holiday, no sick pay, no pension. The individuals concerned decided that on balance they preferred to take the rough with the smooth of self-employment.
How did employers react? Mostly, they hired the individuals back as contractors rather than employees. On the whole they were happy because they could hire contractors for one-off projects or work that didn't need full-time devotion.
The problem came that these contractors blurred the lines between employee and self-employed. HMRC cared because of the PAYE/NIC point. A whole raft of tests were established by case law which described the 'hallmarks of employment'. There are around a dozen of them, and their presence or absence gives an idea about whether contractors were employees or not. They're hard to apply, in practice. It's fairly common to find that half a dozen apply but the rest don't - where does that leave the contractor?
So, to put the matter beyond doubt, employers started asking contractors to incorporate service companies, which the contractor owned 100%. The employer would sign a contract with the service company - which couldn't possibly be an employment contract, as a matter of tax and employment law - and the service company required its shareholder to fulfil the terms of the contract.
That's what was happening at the BBC and many other organisations, and continues to happen now. It wasn't tax driven, although there used to be tax advantages. But for most people they were the cherry on the cake. The motivating force was the drive to be self-employed.
However, HMRC thought that some contractors were taking the piss. They had a point. Some of the contractors only had one contract - with their former employer - which they'd been running for years, with a desk at the former employer's office, and a business card, and a phone line, etc ete.
So HMRC introduced legislation that has the effect of applying the PAYE/NIC code to service companies. It takes away almost all of the tax breaks associated with having a service company. The other pro's and cons still apply.
The BBC has said categorically that if a contractor wants to be an employee then s/he will be put in payroll. If the contractor wants to be self-employed then they'll have to have a service company to put their status beyond doubt.