Treasury officials have been urged to avoid any abrupt tax changes in next month’s Budget which may disproportionately hit oil and gas workers.
Many workers could face higher bills if the IR35 rule is extended to the private sector from April.
IR35, which was introduced in 2000, is an anti-tax avoidance rule that applies to all contractors and freelancers who do not fall under HM Revenue and Customs’ definition of being self-employed.
If Chancellor Rishi Sunak sticks to the policy of his predecessor, Sajid Javid, from April 6 every medium and large private sector business in the UK will become responsible for setting the tax status – or IR35 – of any contract worker they use – forcing thousands to pay income tax, as well as a higher rate of National Insurance.
West Aberdeenshire and Kincardine MP Andrew Bowie has previously called for a review of the policy and in a Commons debate today will again apply pressure over the issue.
He is due to say: “The North Sea is, at present, one of the most attractive mature basins in the world in which to invest today.
“That is because of the long term and fiscally sensible approach the HM Treasury has taken to the industry in recent years. With the Budget but days away, I would urge the Government to avoid any abrupt action – any change in the tax regime – that would undermine investment in an industry not only embarking on its biggest and most challenging transition in its history, but one that is still recovering from the shock of the 2014-16 downturn.
“We need the UK Oil and Gas industry to be a success – we need a local supply chain and local capability.
“So let the message be, from this Parliament and from this Government, that we support the UK oil and gas industry, that we understand its importance, that we will invest in and work with the sector and that we will ensure the North Seas attractiveness to investors, through maintenance of a steady and sensible fiscal regime, for many years to come.”
Mr Bowie is also expected to call on the UK Government to “commit to increasing support” for carbon capture technologies in the north-east.
During the election campaign the Tories suggested that Peterhead would be the location for the UK’s first carbon capture and storage (CCS) project.
The revelation came after the Tory manifesto committed around £800 million to the infrastructure needed to get the new technology off the ground.
In 2018, St Fergus near Peterhead was highlighted by a Westminster taskforce as a key site to deploy CCS at scale – with the potential for hundreds of jobs.
It is estimated the north-east could store around 75% of the UK’s CO2 emissions if the investments were to go ahead.
‘Oil and gas sector has been failed by the Tory government’
Aberdeen South SNP MP Stephen Flynn MP accused the Tory party of “failing” the industry, however.
He said: “Despite the repeated rhetoric and pledges, the reality is that Scotland’s vital oil and gas sector has been failed by the Tory government.
“It’s no secret that successive Westminster governments have squandered the revenues from Scotland’s oil and gas industry and have siphoned it off to line the pockets of the Treasury, rather than reinvesting them back in our local communities and into the future of the industry.
“The Tory manifesto committed to transform the industry but the Tories have failed since then to outline any of the details or even give any hint of a plan. Far from delivering for the industry, the Tory government is increasingly guilty of turning its back on it.”
