You are quite right in what you say, if this action goes against Sherburn it could have major repercussions for other flying schools.
If HMRC win against Sherburn it will create a dangerous precedent.
You are both wrong I suspect. It will do no such thing. Such cases are inevitably decided on the facts. There will be no point of law at issue and the circumstances of each school will be different.
Perhaps more importantly - I like to manage my own tax affairs. I prefer to deduct my business associated expenses prior to paying tax, and do not want to be in a situation where HMRC can deduct PAYE/NI at source on gross pay and I have to fight to get it back retrospectively.
If you are self employed you MUST manage your affairs. It is a matter of fact whether or not you are self employed. The test is not unreasonable.