Oil and gas operator shows best practice when preparing for IR35 reform 

Leading Oil & Gas firm to reap the benefits of preparing early for off-payroll tax changes

Leading North Sea Oil & Gas operator, Ithaca Energy, is set to continue reaping the benefits of engaging contract workers long after the arrival of reform to the off-payroll working rules in 2021. 

Having taken the important decision to engage Qdos and prepare early for changes to IR35 which, following a 12-month delay, will now be rolled out in the private sector on 6th April 2021, Ithaca Energy is confident in its ability to attract and retain contractors, who make up an important part of the company’s 400-strong workforce.  

The reform will see Ithaca Energy, along with all medium and large private sector businesses, become responsible for determining the IR35 status of the contractors. As part of these changes, the party in the supply chain tasked with paying the contractor (the ‘fee-payer’), will shoulder the liability from this date.  

As a result, in the lead up to the original date for the roll out of the changes (6th April 2020), Ithaca Energy took a proactive and measured approach to the reform, which they identified internally as a regulatory change that deserved careful management. 

Ithaca Energy had the foresight to realise the importance of gaining a strong understanding of IR35 and the reform. They held initial meetings with Qdos, HMRC and industry bodies to educate and inform their approach. This helped lay the foundations for a plan that allowed the business to continue engaging contractors in a compliant manner outside IR35 while, at the same time, minimise the risks the reform presents. 

With a firm understanding of the reform, Ithaca Energy knew it was vital that fair status decisions that prioritised compliance took place rather than imposing blanket IR35 determinations. 

To lead the project, the business created an ‘IR35 Working Group’ whose responsibility it became to ensure the key objectives were carried out. After having first measured their ability to successfully implement the reform following an in-depth IR35 audit carried out by Qdos, Ithaca Energy identified two main aspects it required external support with: 

• Help when recognising if an individual should be engaged as a genuine contractor and outside IR35, or should be engaged inside IR35 and as an ‘employee for tax purposes’. 
  
  
• Assistance when conducting IR35 status assessments on a case-by-case basis, which is widely regarded as best practice when ensuring greater accuracy. 

Having specialised in IR35 compliance since the legislation was introduced 20 years ago, Qdos was engaged to provide Ithaca Energy with a range of trusted IR35 services to help make sure the business was ready for the anticipated rollout of reform in April 2020.  

In addition to an IR35 audit, our team of specialists delivered extensive training and facilitated workshops to bring the business up to speed on the reform. We then carried out individual IR35 contract reviews, thoroughly examining each aspect of every contract before advising on status. Finally, Ithaca Energy took out IR35 insurance with Qdos to protect itself from the risks the legislation presents. 

Thanks to forward-planning, a measured approach and the ongoing support of Qdos, Ithaca Energy is well placed to compliantly manage the reform, which will be important in helping the business achieve its goal to become the highest performing UK North Sea independent Oil & Gas company. 

As Ithaca Energy’s Carol Norrie, who worked alongside Qdos throughout, explained: “We are confident in our approach to IR35 both pre and post reform. We believe that our processes are robust, fair and transparent. We are clear on key milestones, such as re-engagement of our contractor workforce and with suppliers and do not envisage any issues when the legislative reforms come into force.” 

To download the full case study, please click here. For more information and to hear how Qdos is enabling over 2,200 businesses to successfully navigate changes to the off-payroll working rules, please call 0116 478 3390 or email [email protected].