Posted on Wednesday 3 December 2014 by Ulster Business
While the devolvement of corporation tax announced in the Chancellor’s autumn statement is a boon for the Northern Ireland economy, the move brings with it a number of risks, according to a UK-wide tax body.
The Chartered Institute of Taxation (CIOT) said the measure, which is predicated on the Executive proving it can “manage the financial implications”, will most obviously leave a shortfall in the region’s finances
“The plan is that this will be made up by increased inward investment,” Malachy McLernon, Chair of the CIOT’s Northern Ireland Branch, said. “But there is a risk here, and people should be aware of it.”
He said that firms which operate across the UK will face additional administrative burden, one which will require them to spend time calculating profits earning in Northern Ireland separate from the rest of the UK.
And he said there would be enforcement issues for HMRV which would need to make sure businesses are not wrongly assigning profits to Northern Ireland rather than the rest of the UK.
Meanwhile, all-island tax body ACCA said cutting corporation tax alone is not enough.
“Changing the tax regime cannot be done in isolation however – what is needed is a co-ordinated support strategy put in place to maximize the new powers,” Chas Roy-Chowdhury, head of tax for ACCA said. “This will cost.”
He said he wanted to see further development of education and training in Northern Ireland, a support strategy which can help to grow targeted industry sectors and the continued funding of capital investment to help attract global businesses.
Mr Roy-Chowdhury also said the financial decision as to whether tax-setting powers will be devolved is linked to the upcoming general election.
“It is worth noting that the final push for a potential outcome is being linked by some to a hung Parliament and a deal between Northern Ireland’s DUP MP’s and the Tories.”