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‘Sleepless nights’ as new Covid-19 self-employment support leaves many North Sea workers in limbo

Crunch talks with the OCA have been rescheduled.
Oil workers boarding a CHC Helicopter operated S92 aircraft

New UK Government measures to support the self-employed will cause “sleepless nights” for those North Sea workers who have been left in limbo, according to industry experts.

The new funding plans – aimed at helping struggling independent workers – provide a taxable grant worth 80% of a worker’s profits up to a cap of £2,500 per month.

The scheme is available to those with a trading profit of less than £50,000.

Jake Molloy, RMT regional organiser, said many worker were left “no better off” by the new measures.

He said: “I don’t know that workers are in a better situation because of this.

“Many contractors have been put over to this Pay as You Earn (PAYE) situation where they are not employees, but the equivalent of PAYE is being deducted from their pay by an agency – it’s just a mess.

“Workers who are on day rate contracts – a provision of service contract – are also no better off.

“Divers are also on a unique taxation system, which HMRC claims does not make them self-employed workers. They should be considered employees but they don’t pay PAYE, so where do they fall?

“It will cause sleepless nights over the coming weeks.”

Mr Molloy added that the Saudi-Russian oil price war would also see the North Sea “feel the greatest pain” and called on the UK Government to introduce furloughed status for workers “as quickly as possible”.

He said: “We’ve just come out of the worst recession that the industry has experienced, yet right in this minute in time we are in a worse situation than we were in late 2014.

“It’s incredible. We just don’t know what kind of future situation we are going to be in.

“We need some kind of state intervention.”

Martin Findlay, senior partner at KPMG Edinburgh, agreed that North Sea workers were currently experiencing the double hit of the Covid-19 outbreak and low oil price.

However, he said the North Sea could recover if the sector bounces back quickly.

Mr Findlay said: “The measures are clearly helpful but they come at a time when the industry is facing not only the restrictions caused by the virus but a reduction in activity caused by the low oil price.

“There is a wider potential issue in that the downturn is only some of the time Covid-19 related and the bit that isn’t leaves self-employed workers in a difficult position.

“I think if oil price and oil company activity picks up quickly, I don’t see there being any problem in the North Sea getting back to where it was – but those are two very big ‘ifs’.

“In the period between now and then workers will feel some real personal hardship, because it will be deeply felt by those who don’t have any saving that they can draw on.

“The scheme announced on Thursday night doesn’t pay out until June and it does come with a number of conditions that not all self-employed contractors will meet.”

Neil Bridgeford, associate director, of audit and tax consultants RSM, said many contractors “fall between” the UK Government job retention scheme and the self-employment income support scheme.

He described it as “a contradiction”.

Mr Bridgeford said: “For those who operate as a sole trader and whose profits are less than £50,000 the opportunity exists to claim a grant at 80% of their profits.

“Those who operate through a PSC, and pay themselves in dividends, will see the level of financial assistance greatly reduced – this is a contradiction.

“Under the existing IR35 rules such contractors are “employees for tax purposes” when their financial support in many cases will be nowhere near the level that an employer will get for their employees.”

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