Billy’s Blog



IR35 Affects Energy Industry

20 February 2020

IR35 Affects Energy Industry

The news came this week that BP contractors have until 31 March 2020 to accept a new contract that will seem them taxed in the same way as salaried workers. Contractors working for the oil and gas giant are understood to have received communication via their employment agencies that BP will sever ties with all personal service company (PSC) contractors from the end of March.

The message came with the clarification that BP “will not increase rates” to compensate contractors for any loss in their take home pay that might occur as a result of the policy. Around 70% of the firm’s IT workforce in the UK is made up of contractors. This means that there’s the potential for serious disruption to digital projects if contractors decide to turn their backs on the firm as a result of the policy change.

BP aren’t the only energy company to adopt the PSC ban, prompting many in the sector to consider their contracting options. It’s known that the nuclear engineering workforce is ageing. Increasing numbers of contractors are going into emerging and renewable energy industries, meaning that there are less people progressing through the ranks in the nuclear, oil and gas sectors.

Sourcing enough contractors for the number of projects is already a challenge. This is set to become even harder with the incoming IR35 changes. Although contractors may be compelled to move ‘inside’ IR35 by their end-client, it’s likely that they will select contracts that offer other favourable terms, rather than simply accepting their present engagement. A candidate will always seek out the best working conditions and terms that outweigh their competitors.

If contractors decides to bide their time and accept an inside IR35 decision on their current contract, it’s a good idea to ensure that they start with a brand new contract. This way HMRC can differentiate between the working model of their previous engagement, and that of their subsequent one, meaning that HMRC would have less cause to ask retrospective questions.

If you’re blanketed inside IR35 by your end-client, read our objective guide that sets out your options.

This content has been supplied by IR35 Guru.

If you’ve been affected by the IR35 reforms or feel unsure about your position, get in touch with us and we’ll talk you through your options. To talk to a member of our team, call: 0203 393 3881

Topics: News, IR35