> Net result for companies: building big overnight temporary teams out of contractors e.g. for 6-12 month projects are vastly less likely to do so, for fear that at some future date, the tax man could claw back a year's worth of tax for e.g. 20 contractors on the same project

Why shouldn't the companies be paying the required taxes for the 6-12 months exactly? It sounds like they are doing temporary employment. In other words, this finding sounds exactly correct.

Are there no fixed-length employment contracts in the UK? For these projects, wouldn't the correct thing to do be having these people employed on a limited term contract as full employees, and have to pay all the correct employment taxes and such? This seems like a logical thing for the government to want, and I don't blame them for enforcing it.

And wouldn't the person who's doing this work benefit from it as well? They get benefits this way, and it's not like being fully employed by different companies for 6-12 month stretches is that different from not technically being employed by those employees but working exclusively for them nonetheless over 6-12 month periods.