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Cutting corporation tax powers estimated to cost £4 million for IT systems

Published 19/10/2016

MLAs were briefed by HM Revenue and Customs officials at the Parliament Building in Belfast
MLAs were briefed by HM Revenue and Customs officials at the Parliament Building in Belfast

IT costs for delivery of the forthcoming cut in corporation tax have been estimated at £4 million.

MLAs on Stormont's finance scrutiny committee were told the Executive had already been charged £96,000 for implementing new computing systems and staff costs for managing the massive project.

The figures were revealed during a briefing from HM Revenue and Customs (HMRC) officials at Parliament Buildings during which Jon Sherman claimed they were on track to meet the April 2018 deadline.

He said: "We are confident that we are in a position to have things ready to go for a April 2018 start."

The key factors behind reducing the regional tax on profits generated by big businesses to 12.5% - the same as the Republic of Ireland - was to allow Northern Ireland to compete on a level playing field with its neighbour and to give it a distinct advantage over the rest of the UK.

During the meeting, HMRC officials re-iterated the Treasury's stance that, despite Brexit, any cut in corporation tax profits would have to be paid for by the Executive through a reduction in the block grant - the money distributed from Westminster to the devolved regional government.

Current EU rules require the devolved region to foot the bill for the shortfall but some Brexiteers had argued the so-called Azores ruling may not apply following the UK's departure from the EU.

Mr Sherman added: "W ith a 2018 start date it seems highly probable that we will still be members of the EU at that point, I assume from what is being said.

"Even beyond that, the principle of Northern Ireland meeting the costs of CT (corporation tax) devolution and getting the benefits and so on, is something that is written into the Stormont House Agreement; it is part of the process that has been agreed between the UK Government and Northern Ireland and I don't think that is a principle that simply depends on state aid."

Meanwhile, during a separate briefing senior department of finance civil servants said negotiations on the costs of devolving corporation tax powers had not yet been agreed with the UK Government.

Dr Colin Sullivan said: " We continue to liaise with Treasury officials on how best to take forward negotiations on the cost of devolution and to this end we are also engaging with academic experts to model costs and potential block grant adjustments in order to assist us with that engagement."

Committee chairman Emma Pengelly said potential flexibilities in light of the referendum result should be explored during a meeting between Stormont's finance minister and Treasury bosses next week but should not impact on the projected start date.

The DUP MLA said: "It is essential that we give confidence to businesses who are looking to invest in Northern Ireland around the date and the rate of this."

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