HMRC’s IR35 compliance checks for oil and gas companies – are you ready?

24 September 2021

April 2021 saw the biggest change in a generation to the tax rules around engaging off-payroll workers.  We always knew that HMRC would carry out compliance checks but many of us thought that they would allow a little more time to let things bed in.  Well, we were wrong!

We understand that HMRC are already issuing letters to those engagers operating in the oil and gas, banking and finance sectors to open compliance checks into their operation of the IR35/Off Payroll rules. Other sectors are bound to follow in due course.

For all businesses, but especially those in these sectors, this is a timely reminder to consider your processes for hiring off-payroll workers.  It is also important to remember that such reviews are not limited to IR35 issues, but also consider direct engagements with workers. The focus of many employers may have drifted away from such workers in recent years but they are now firmly in HMRC’s sights and as this is not new legislation, HMRC could look back years.  If you’ve had one of these letters, you should treat them carefully as it could be the start of a lengthy and very costly enquiry.  If you’ve not had the letter yet, consider how you might react and, where necessary, use the time before any letter lands to review what processes and controls you have in place.

We have extensive expertise in helping clients manage their off-payroll labour so please get in touch if you need any assistance.

Off-payroll Risk Manager

It is crucial to understand your contractor population and working from your purchase ledger entries, BDO’s Off-payroll Risk Manager can help you easily identify your contractors and pick out the high risk cases for individual review. The tool will then break your contractors down into groups including personal service companies, self-employed contractors and agency workers – allowing you to manage down the risk to your business without having to spend huge amounts of time reviewing individual purchase orders from your supplier population.

BDO’s Off-payroll Risk Manager builds a bespoke risk register that not only allows you to focus your resources where they are most needed but demonstrates to HMRC that you are actively managing the off-payroll issue in your business.

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