A fundamental shake up of the tax rules applying to contractors has the potential to cause increased costs and risks to the oil and gas industry.
The new AGCC report revealed that one in 10 firms will look to convert contractors into full-time employees in response to new legislation relating to off-payroll working rules.
More than two-fifths (43%) of manufacturing, utilities and oil firms are relying on “gut feel” to gauge their exposure to new off-payroll working rules, a poll shows.
In the Chancellor’s most recent Autumn Budget the UK government confirmed plans to reform the IR35 tax legislation for the private sector.
Employment law can be complex and the energy sector is not immune from the confusion that surrounds IR35.
In 1999, the Revenue decided to change the contracting landscape with the introduction of IR35, an anti-avoidance tax legislation. The legislation originally imposed a series of tests to verify whether the worker could be classified as self-employed or not. Qualifying questions included “could they replace themselves if they were unable to go to work”, and “how many companies do they contract with each year” in order to establish their true status.
In April 2020 the Government’s IR35 payroll reforms will come into effect in the private sector, putting the responsibility firmly on larger employers for PAYE and NICs in respect of contractors engaged via an intermediary.
Contractors who work through Personal Service Companies (PSCs) and contract to private sector businesses will see contracts brought under tighter scrutiny through Private Sector IR35 changes likely to be implemented in April 2020.
Incoming changes to contractor rules could help retain skilled workers in the North Sea, the Aberdeen and Grampian Chamber of Commerce (AGCC) has said.
With the North Sea in the midst of a resurgence, there’s a slight temptation for some in our sector to forget a few of the smaller things that are going on. But the recent UK budget saw a call-to-action for the oil industry.
Changes to off-payroll working rules will “acutely impact” the North Sea oil and gas sector, a tax expert has warned.
A new company has been launched in Aberdeen this month in response to the widely expected changes in IR35 legislation for contractors in the private sector.
A freelance contractor has said it is “right” the disguised employee model will “disappear” from the North Sea, thanks to incoming legislation.
The oil and gas sector is bracing for the “extensive impact” of changes to off-payroll working rules announced in the chancellor’s budget, according to a tax expert.
The chancellor announced a change to off-payroll working rules in yesterday's budget for the private sector, which could have wide implications for the oil and gas industry.