Changes to Offshore Employment Intermediary legislation to cost UK Oil & Gas industry as much as £300m per annum

19 March 2014

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Colin Pearson, tax partner at EY in Aberdeen, comments on the measures impacting on Offshore Employment Intermediaries (OEI) announced in today’s (Wednesday 19 March) Budget

“Following the National Insurance Contributions (NIC) Bill issued in October 2013 and the associated draft regulation in November and December, we have government proposals to ensure Income Tax and National Insurance obligations are fully met with regards to the use of Offshore Employment Intermediaries (OEI).

“These proposals, effective from 6 April 2014, include specific measures covering the use of OEI for oil and gas workers on the UK Continental Shelf (UKCS), workers supplied through agencies and persons employed by a foreign employer working in the UK for a UK ‘host; business.

“By definition, a worker on the UKCS who is not and oil and gas worker will be a mariner, with the National Insurance rules for mariners remaining unchanged.

“In short, these proposals can place the PAYE tax and National Insurance obligations on a UK company, not the OEI contractual employer, even though the UK company and the OEI are third parties.

“The likely impact is an increase in costs for the UK Oil & Gas sector of £250-300 million per annum.”

For more information on the 2014 Budget, visit the EY 2014 Budget page.