> agencies have been legally barred from employing people as self employed since the 1970s
Do you happen to have a source for this?
The reason I ask is that I've written to HMRC regarding this precise issue, since I haven't been able to find any official statement to that effect.
While there are structural differences between a 'sole trader' (ie. self employed) and a 'limited company', it's up to the contractor to decide which is more suitable for them. I can't see that the client/agency has any say in the matter.