Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent assessment he has made of the potential effect of the introduction of IR35 on the employment (a) status and (b) rights of offshore energy workers in the (i) oil and gas and (ii) renewables sector.

The off-payroll working rules (commonly known as IR35) have been in place for over twenty years and are designed to ensure that individuals working like employees but through their own company, usually a personal service company (PSC), pay broadly the same Income Tax and National Insurance contributions (NICs) as those who are directly employed.

However, non-compliance with these rules was widespread. It is estimated that this non-compliance in the private and voluntary sectors would cost the Exchequer £1.3 billion per year by 2023/24 if not addressed, denying the taxpayer significant funding for public services. This is not a new tax; the reform will improve compliance with existing rules by moving the responsibility for determining whether the off-payroll working rules apply from the individual's company to the client engaging them.

The Tax Information and Impact Note (TIIN) published at Spring Budget 2021 sets out that nationally, the reform of the off-payroll working rules is expected to affect about 180,000 individuals across all sectors outside the public sector who are working through their own companies, and who would be employed if engaged directly. No specific assessment has been made of the potential impact on offshore energy workers.

The TIIN can be found on GOV.UK: https://www.gov.uk/government/publications/off-payroll-working-rules-from-april-2021/off-payroll-working-rules-from-april-2021.

Falling within the off-payroll working tax rules does not change an individual's status for employment rights; there are separate legal frameworks for determining employment status for tax and for rights, with no direct link between the two.