When HMRC introduced changes to the ‘off-payroll working rules’ – known as IR35 – it promised the private sector a year-long ‘soft-landing’ until April 2022. What does the end of this grace period mean for businesses in the oil and gas sector?
Controversial changes to off-payroll working tax rules have left some oil and gas firms struggling to fill ‘vital roles’, according to new data.
Oil and gas firms that are not IR35 compliant could soon be hit with “penalty charges” as the ‘soft landing’ period wraps up.
When HMRC introduced changes to the ‘off-payroll working rules’, commonly known as IR35, in April 2021, it promised the private sector a 12 month ‘soft-landing’.
As energy demands and prices recover from the pandemic, production pressure on the oil and gas industry has rapidly increased in 2021. Many companies are finding it difficult to recruit and, importantly, retain the talented professionals they rely on.
Contractors are a vital part of the workforce in the energy industry; their skills and flexibility are heavily relied upon to deliver projects on time and on budget.
The current shortage of road haulage drivers stems from a number of causes, but the least talked about is a change to the way that tax is paid by contractors. These changes to the ‘off-payroll working rules’, or IR35, were introduced to the private sector in April this year. The same changes caused chaos for contractors when they were introduced to the public sector back in 2017. So, to stop history repeating itself, what can the energy sector learn from these mistakes?
The energy industry has traditionally relied on skilled contractors for project delivery, offering an attractive route for flexible work long before many other sectors realised its benefits. But it now risks being left behind in the post-pandemic competition for talent.
The “sheer scale of disruption” sparked by changes to IR35 rules have surpassed expectations, an employment expert has said.
A specialised law firm is making moves to help Aberdeen’s energy sector “unlock IR35” as the market, and demand for flexible labour, picks up.
Unions are threatening strikes after talks stalled on an IR35 pay dispute for Bilfinger Salamis workers on North Sea assets.
New IR35 tax rules impacting thousands of workers across the oil and gas industry and beyond come into effect today.
A pay row has been sparked between Bilfinger Salamis and dozens of independent contractors it hires on Taqa assets over IR35 tax changes.
For many years in the North East of Scotland, the personal service company (PSC), otherwise referred to as a one-man company, has become a fairly standard way to provide services, particularly in the oil and gas sector, due to a mixture of employment law and tax law.
Some oil and gas contractors have lost more than half of their previous wage due to off-payroll working tax changes, according to a union boss.
While COVID-19 and Brexit have dominated the agenda for oil and gas businesses in recent times - and rightly so I should add - there is a third issue that this industry is taking just as seriously. I am, of course, referring to IR35 reform in the private sector.
From April 2021, large and medium firms in the private sector that hire contractors will be responsible for determining their IR35 status rather than the contractors themselves as the Off-Payroll legislation takes effect. Whilst many oil firms will continue to hire contractors off-payroll, we are seeing some taking a risk-averse approach and issuing blanket bans on hiring contractors who work through their own personal service companies, insisting instead that they all go PAYE, either directly or via agency payroll.
Employment experts have warned that hopes of a further IR35 delay are “fanciful”, despite months more of Covid lockdown measures coming.
With the UK oil and gas market reeling from COVID-19, it’s clear that the decisions made by businesses in this industry as they focus on a recovery in the coming months need to be strategic, measured and informed.
The oil and gas downturn of approximately five years ago where the price of a barrel of oil dropped to less than $30 led to thousands of employees in the sector being made redundant. Those who wished to remain in the sector had to be patient before ultimately securing further employment.
The UK Government is pressing ahead with delayed changes to off-payroll working rules, known as IR35, despite peers having urged it to “completely rethink” its plans.
There has been a lot of discussion over the last 12 months about how the changes to Off-Payroll rules will impact the UK Private sector, and I have read with great interest some of the comments and foresight on what IR35 is and what it will mean to the UK contracting workforce.
MPs have blocked a move to delay the introduction of IR35 tax rules to the private sector until 2023.
A House of Lords committee has called on the government to “completely rethink” a controversial tax reform which will have sweeping implications for North Sea contractors.
IR35 reform has been delayed, so what should Oil & Gas companies do now?