HMI Prisons taking tax and NIC from self-employed freelancer

A client is doing some freelance work for HMI Prisons, She was taken on as self-employed and her contract says that and that the work is for editing reports at home using her own equipment. She finds that she is being taxed and NICed at source. She challenged HMI Prisons about this and has received the following email:

"Having discussed the issue of our fee-paid staff with the Ministry of Justice Head of Taxation, I was advised that for tax purposes fee-paid staff need to be paid via the MoJ payroll. I was informed, if you are not paid via payroll, HMRC could fine HMI Prisons for tax avoidance. However, I was advised that the payroll payments are purely for tax purposes, and no employee rights are obtained as we do not contractually require you to work any particular/minimum days/hours per year as would be the case if you were an employee"

It seems that they are trying to have their cake and eat it, and my client is not able to claim for her expenses for this part of her work.

Any thoughts?