"Scam" is an unwarranted word. Generally speaking IT companies in the UK don't accept contractors except in a B2B arrangement - umbrella or Ltd. That's the whole point of a contractor: to avoid getting an employee.

If the contractor can be assimilated to an employee (i.e. is part and parcel of the organisation he or she works for, which is not always the case - the HMRC has guidelines on this) then a Ltd falls under IR35 legislation, which ensures that the contractor is royally screwed for tax purposes. It's not called Her Majesty's Revenue and Customs for nothing