I won't start going on about what a ridiculous situation this is for RYR pilots, you're all well aware of that fact.
Here's a couple of things that might clarify the situation in regards to ID's and some of the points on here so far.
1) You should be able to offset the cost against your tax bill. Not all of it of course, but it's a start.
2) Being a contractor doesn't stop you getting a mortgage. If you've been a contractor for more than 2 years and have been working regularly in that period, you will invariably be counted as a permanent member of staff by the mortgage company and so your employment status is irrelevant. If under 2 years, then you can usually get 3-4 times the value of the contract as a mortgage. So, if you have a one year contract and can prove how much you'll flying you'll get, then there's no problem.
3) I never quite understand the problem with being a contractor. Alright it's a bit less stable than being a full-time employee, but financially it makes a massive amount of sense. Especially in regards to your take home pay. After contracting, it's very, very hard to go back to being a full-timer unless you get a mahoosive pay increase. You just need to set yourself up properly and be disciplined with your accounting, but you should be able to keep a huge amount more of your pay than a full-timer.
4) Having a company I.D means naff all in regard to your employment status.
5) Just be thankful that they aren't asking you to get a BAA pass out of your own pocket, they really are silly money.
6) RYR are taking the proverbial with this.