Businesses across the North-east of Scotland’s energy supply chain are being urged to prepare for potential growth opportunities as the UK Government considers its response to public consultations on the future of the Jackdaw and Rosebank developments.
With the consultation periods closing, ministers are expected to set out their position in the coming months, potentially providing greater clarity over future licensing activity in the North Sea.
Advisers at the Aberdeen office of accountancy and business advisory firm Azets say that while the outcome remains uncertain, businesses should use this period to ensure they are commercially, financially and operationally ready should new opportunities emerge.
Frazer Nicol, Tax Partner, said: “Companies that invest in preparing their systems and processes before contracts come to market will be best placed to respond, mobilise and deliver if activity increases.”
As well as operators and drilling contractors, Frazer said renewed investment could create opportunities for engineering firms, manufacturers, logistics providers, tech businesses, vessel operators, recruitment specialists and many other sub-contractors.
“The North-east has spent decades building one of the world's most experienced energy supply chains,” he said. “Whether future opportunities come from traditional oil and gas or renewables, or both, that expertise remains one of our region's greatest strengths.”
Frazer called for businesses to review five priority areas:
Taxes and tax reliefs. A tax ‘health check’ should cover existing arrangements for complying with Customs processes, VAT, Corporation Tax and employment taxes especially PAYE and employers’ NI. At the same time, it’s important to ensure the right structures are in place for claiming capital allowances, investment incentives, R & D credits and other reliefs.
Related HMRC compliance. Relevant tax arrangements should be considered for non-UK businesses involved in international trading. With VAT registration for example, it can often take time for HMRC to process an application, particularly where the business is established outside the UK or has non-UK directors.
Employment. Ensure hiring plans, global mobility arrangements and payroll operations are ready. As well as PAYE and NI, employers should check their arrangements for off-payroll working (IR35), the employment status of contractors, share incentive arrangements, expense claim policies and other employment-related issues.
Cashflow. Consider the headroom available for how to fund initial contracts and rentals. This is important since recovery of VAT on start-up costs is often subject to HMRC verification, delaying the VAT repayment process.
Commercial. Update bid documentation, supplier registration and framework agreements alongside governance, procurement and resilience policies.
Azets’ advice comes as interest in alternative energy sources continues to grow with governments and major industrial buyers seeking to diversify energy supplies away from reliance on fossil fuels. Geopolitical instability in the Middle East has highlighted the importance of energy security and contributed to higher oil and gas prices, reinforcing the need for investment across a broader mix of energy technologies.
Frazer said: “The conversation is often presented as oil and gas versus renewables, but the reality is much more nuanced. Many businesses already operate across multiple parts of the energy sector, and the engineering, technical and project management skills developed over decades are highly transferable.
“Whatever direction future policy takes, companies that invest now in strengthening their business foundations will be best placed to capitalise on opportunities across the full energy landscape.”
Frazer added that preparation could make a significant commercial difference. He said: “Many businesses naturally focus on winning work first and dealing with tax and compliance afterwards, but that can create unnecessary delays, additional costs and commercial risk.
“Simple measures such as reviewing VAT registrations, ensuring payroll and employment tax arrangements are fit for purpose, assessing cashflow requirements and checking that customs and international trading processes are in place can save valuable time when projects begin.
“We've seen before that those who prepare early are often able to onboard new contracts much more efficiently and avoid issues that only become apparent once work is under way.”
Azets’ Aberdeen office advises a diverse client base, including SMEs, corporates and private individuals, offering services across Audit & Assurance, Tax Advisory, Payroll, Corporate Finance, R&D Tax Credits and Private Client Services.
Since 2018, the Aberdeen team has grown from five to more than 70 professionals and continues to expand in response to increasing client demand.
Azets is a UK top 10 accountancy and business advisory firm. As well as Aberdeen, its Scottish offices are in Inverness, Perth, Ayr, Edinburgh and Glasgow. For more information, visit www.azets.co.uk.