Huge impact on oil businesses using consultant contractors
On the 6th April 2021, the UK off-payroll tax regulations known as “IR35” apply to all large and medium sized companies operating within the UK. It could have a huge impact on oil and gas companies currently using consultant contractors to undertake key projects.
Ayden Forsyth, Consultants Services Manager for OPC said;
The flexible labour market in the UK has been mutually beneficial for expert Engineers and Oil Companies. Engineers can offer their services via a Limited company to a variety of clients, getting exposure to different projects becoming true specialists’ while employers are able to benefit from their expertise without the heavy time and financial investment of maintaining a Full Time employee.
It is these experienced engineers that will be impacted by the new regulations, and many legal counsels at large UK businesses are issuing instructions that all of these contractor contracts have to be terminated before 6th April. This is causing a huge conundrum for resource managers at oil companies; how are they going to deliver the expert services currently being undertaken yet comply with their legal team’s advice? It could be up to 50% of a team’s technical expertise removed in one go.”
Some of the remaining options for oil company resource managers are offered by OPC:
- Only use permanent fully employed professionals
- Outsource all technical work to outside suppliers
Ayden continues “Oil & Gas is a global marketplace, the risk of consultants exporting their service outside of the UK will leave many Oil Companies with a Technical Skill Gap which will be increasingly difficult to fill.”
Fortunately, because OPC provides a technical consultancy service and contractors, the business is able to offer a solution that combines the best of the fully outsourced model with the best of using contractors unlike any other staffing provider.
Piers Johnson, Managing Director for OPC said;
Our unique position of being a technical consultancy and an international contractor provider means that we can combine our scope and continue to offer expert consultants to clients through a fully compliant outsourced project arrangement with outcome-based delivery. We are already talking to a number of operators about taking on all of the work currently undertaken by contractors from next year.”
A brief summary of the OPC solution to IR35 is shown below:
Every company currently utilising independent consultants either direct or via a recruitment agency will be impacted by IR35. We are offering a free assessment of the impact on your business. Please contact Edna Travers to arrange a full assessment of your IR35 readiness.