Tensions over new tax changes to offshore contractors arose yesterday as Cnooc International became one of the first North Sea firms to roll out its new off-payroll working rules.
The Chinese oil and gas company this week outlined its IR35 strategy to contractors – with some voicing concern it may strip employment rights.
But the Beijing-headquartered firm said the new strategy “ensures” its compliance with new Her Majesty’s Revenue and Customs (HMRC) changes.
North Sea oil and gas firms – alongside the IT sector – are predicted to be most impacted by the new IR35 legislation due to the number of independent contractors.
The new rules seek to halt individuals registering themselves as companies to pay less tax.
The UK Treasury has estimated the measure will bring in an additional £2.9billion in taxes by 2024, and follows similar rules being brought into the public sector last year.
It is due to come into effect in April 2020.
All North Sea operators are now legally obligated to ensure that contractors in their employment are compliant with IR35 rules by the deadline.
A spokesman for Cnooc International said last night: “Our contracting strategy ensures that we will be compliant with the changes to off-payroll working (IR35) rules which come into effect on 6 April 2020.
“Contractors have, and will continue to, play a central role in the success of Cnooc International.”
However, one offshore contractor, who did not wish to be named, expressed concern about whether the new rules may increase taxes in line with other employees, while providing none of the safeguards enjoyed by contracted workers.
Andy Chamberlain, deputy director of policy and external affairs for the Association of Independent Professionals and Self-Employed (IPSE) said he “fully understands” the concerns of contractors “with regard to them being taxed as employees, but with no employment rights”.
IPSE are actively lobbying to stop the IR35 legislation coming into effect in April next year.
Mr Chamberlain, who did not want to be drawn on Cnooc International’s individual strategy, said: “There is a worry that the rules will encourage unscrupulous behaviour by those companies that are seeking to exploit workers.
“But the real villain here is the legislation itself which is causing all sorts of problems and it hasn’t even been passed yet.
“The UK Government is being very irresponsible.”
Chancellor of the Exchequer Sajid Javid pledged a review of IR35 legislation last month as part of the Conservative Party’s manifesto bid to support self-employed workers.
An independent spokesman on IR35, who also did not want to be named, said he understood the position of Cnooc international and its need to protect its business from risks and liabilities associated with the new off-payroll rules.
He claimed that many companies have decided to push forward with changes “despite a lack of clarity provided by the UK Government on how best to interpret and implement the regulations”.
He added that the UK Treasury are “very much behind” executing the new IR35 rules, adding that companies “have some major hurdles to overcome first”.
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