IR35 was introduced because contractors often pay less income tax than employees (by using dividends from their one-man limited company, and by deferring income to maximise use of allowances). So the government is out money.
It seems they're fine being out this money if it's genuinely a business-to-business kind of deal. But not if it is disguised employment.
The only time I was ever asked to fill out IR35 paperwork I pointed out that I was contracting as an individual, rather than through a limited company, expressly because the contract was basically tantamount to employment and I had no interest in paying less than the full rate of tax. They were... surprised.