CIOT: Corporation tax devolution - a challenging opportunity

CIOT: Corporation tax devolution – a challenging opportunity

CIOT: Corporation tax devolution – a challenging opportunity

The devolution of corporation tax to Northern Ireland would bring both challenges and opportunities, says the UK’s Chartered Institute of Taxation (CIOT).

The Chancellor announced in today’s Budget that a consultation paper will be published tomorrow which will include mechanisms for devolving the setting of the corporation tax rate in Northern Ireland to the Northern Ireland Executive. The aim would be to attract more businesses to locate there: the challenge would be to make up the shortfall in corporation tax revenues with additional taxes generated, without imposing additional administrative burdens on businesses.

Brendan Morris, chair of the CIOT’s Northern Ireland Branch said:

“If a corporation tax rate cut worked, that would mean more companies choosing to locate themselves in Northern Ireland, generating more income tax, national insurance, business rates and VAT. However there is no guarantee that the books would balance in the Executive’s favour.”

Brendan Morris also pointed to the risk of imposing additional administrative burdens on business at a time when burdens need easing. He continued:

“The profit of a company that only operates in Northern Ireland would clearly be subject to a new devolved rate. But how would a UK-wide trader derive its Northern Ireland profits figure? How would HMRC police the split? The risk is that new rules could generate significant admin burdens for businesses and for HMRC.

“As with the ongoing devolution of tax powers to Scotland, it is essential that our politicians making a decision on whether to vary from the UK rate understand all the technical and practical issues involved. The Chartered Institute of Taxation are keen to help in this important process in any way we can.”

He concluded:

“This could be a real boost to the Northern Irish economy but it would not be a one way bet.”

Notes for editors

1. The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.

The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.

The CIOT’s more than 15,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.

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George Crozier
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