Government was never able to prove it was a tax avoidance. If you wanted to draw all the money from the company you would pay broadly the same tax as an employee. The only angle that one may consider as avoidance was that the client wouldn't have to pay employer's NI - but given the freelancer services were charging considerably more than employees, that wasn't an incentive either and they weren't employees, so it shouldn't apply either. Basically tax avoidance angle is a red herring and based on research it was the best carrier for this law to gain public acceptance plus it could paint freelancers in a bad light. The real reason this was adopted, was that big consultancies had a hard time competing with freelancers - they offered better price and expertise and as it happens a lot of government members and party members have vested interest in these corporations.