A Memorandum of Understanding which sets out the respective responsibilities of HMRC and the Department of Finance and Personnel in setting up and operating the Northern Ireland Corporation Tax rate has been published.

The Memorandum divides responsibilities between the two bodies and also allows HMRC to recover some costs from the Department such as administrative and IT costs. These costs, if incurred, will be recoverable even if DFP does not set a different CT rate for the Province.

Perhaps of most interest to NI practitioners and businesses is the spelling out of the rate setting arrangements. The NI CT rate setting power may not be exercised unless Treasury regulations have been made to the first financial year for which an NICT rate may be set. If such regulations are made, the Northern Ireland Assembly (NIA) will not be required to set a particular rate. The NICT rate will be set by the Northern Ireland Assembly by passing a resolution prior to the commencement of the financial year to which the rate applies. If no rate is set for a particular year the rate in the previous year continues to apply. If the NIA never set a rate then the rate will default to the UK main rate for the relevant Financial Year. The Department and HMRC are to agree processes for communicating rate changes.