The UK Government has set its sights on private sector employment practices in a move expected to have huge implications for the North Sea oil and gas industry.
Other sectors are likely to be greatly impacted as the government seeks to extend recent rule changes for off-payroll working in the public sector to industry.
A worker is “off-payroll” when they work for a company through their own business, rather than directly.
They pay income tax and national insurance contributions (NICs) in a different way to people who are directly employed.
It is a model that is widely used in the oil and gas industry, but also in construction.
According to documents released on Budget day, rule changes introduced in the public sector have been a success.
The government is now considering whether to extend the reforms to the private sector. Research has been commissioned and a consultation is on its way, the Treasury said.
Chris Campbell, senior tax manager, employer solutions at Aberdeen-based accountancy firm Johnston Carmichael, said the trend seemed to be towards IR35 (off-payroll rules) reforms spreading beyond the public sector.
“This would have a huge impact in the North Sea, with firms potentially facing a bigger NIC bill,” he said, adding it could also affect day rates.
Industry body Oil and Gas UK said it was “pleased” the government had decided to consult employers.
Jake Molloy, regional organiser for the RMT union, said: “We welcome the focus on the bogus self-employment arrangements in the private/offshore sector. Someone who is supposedly self-employed will inevitably be less likely to challenge bad or unsafe practices.”
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