The Institute of Chartered Accountants in Ireland (ICAI) has sent out a clear message that the outcome of the Varney Review on the reduction of Corporation Tax in Northern Ireland must be based on justifiable evidence when the report is published.

With the report rumoured to be negative, the Institute is now calling on the Northern Ireland Affairs Select Committee at Westminster for an immediate enquiry into the report as soon as it is published to scrutinise what methods have been employed to come to the suspected overarching conclusion – that a reduction to a 12.5% corporation tax for Northern Ireland will not be advanced.

The ICAI has warned that with an annual £6.8bn State subsidy for the North and the scale of the public sector economy at 60% of GDP normal economic growth in the future will be significantly distorted. Sustainable economic growth, reduced dependence on public subvention and a favourable investment climate are the key elements in the development of the NI economy the business body claims.

Suggestions that a differential tax rate would fall foul of EU law, or will lead to widespread tax avoidance are not well founded, and based on international experience of similar tax regimes, all such concerns can be addressed. The ICAI's conclusion is that there are no significant legal or fiscal impediments to the introduction of a 12.5% rate and that the British government should move now to provide Northern Ireland with the means to grow its own economy.

The ICAI says this is a once in a lifetime opportunity to boost the Northern Ireland economy and play a historic role in bedding down peace in the region by reducing the rate of corporation tax, bringing it into line with that of the Republic of Ireland.

Speaking ahead of the Varney Review publication, Brian Keegan, Director of Taxation, said today:

• ‘We fear this report will not give Northern Ireland business the reduced tax rate that it requires to develop and prosper. A negative outcome to this review has the potential to dilute NI's attractiveness as a place of inward investment.
• We are engaging with the NI Select Committee in Westminster as this is an appropriate way in which we can keep the message on the agenda and ensure that the Varney conclusions are transparent and based on clear evidence. With the Comprehensive Spending Review and Pre Budget Report due tomorrow this is an important opportunity and the right time for the current Government to follow up on its commitment to Northern Ireland’.

In anticipation of the Varney Review report the ICAI has gained the support from the Northern Ireland members of the NI Affairs Select Committee at Westminster. Since August 2007 the ICAI has met with the following Members of Parliament:

• Stephen Pound MP – Deputy Chairman of the NI Affairs Select Committee
• John Grogan MP, Lab, Selby
• Sammy Wilson, DUP, East Antrim
• Lady Sylvia Hermon, UUP, North Down
• Alasdair McDonnell, SDLP, South Belfast
• Gregory Campbell, DUP, East Londonderry MP.