Oil and gas contractors
When IR35 was introduced, it’s possible that contractors in the oil and gas industries weren’t initially targeted by HMRC compliance teams, due to the importance of the energy sector to the economy.
Because IR35 hasn’t seemed much of a threat, many contractors and companies aren’t aware of the risks arising from issues over their status; ie whether they’re deemed to be self employed or an employee. If a contractor is deemed to be working in the capacity of an actual employee, there are huge tax implications.
HMRC is now clamping down on what they see as tax evasion and are scrutinising contractors far more closely. This holds a particular threat to contractors in the oil and gas industry, as many have been working for the same company for years.
One recent example involved a contractor who had been called in to an offshore supply chain operator to provide interim management and to fill a temporary skill shortage for a 6 month contract. Following a company re-organisation, he found his contract had been extended for four years.
Initially, he was clearly outside IR35, but as time progressed, the dividing lines blurred and his status became less clear.
We were able to reassess the basis on which he was brought into the company, and we set risk management techniques in place to insure he maintained evidence of his status in the future. We also worked closely with his client to clearly set out their original intentions and provide as much evidence as possible. Because we felt that there was still some risk of HMRC deciding he was inside IR35, we helped him start to set money aside to cover potential liabilities, which meant he could get on with things without worrying.
If you’re already a contractor in the energy sector, we can review your IR35 status and make sure you’re operating compliantly. We can also offer practical advice on what to do if you’re not. If you’re just starting out, we can look over your contract, check whether you’re inside or outside IR35 and advise on where to go from there.
