ICAI and the Varney Report
Author:
Pat Costello
One of the key objectives of ICAI is not just to represent its members but to represent the wider interests of the business community for the public good. Much of this work is done behind the scenes and often must remain private if it is to be effective.
In the past, this has given rise to frustration on the part of some members unaware of the range of representative work undertaken on their behalf. I am pleased to say that this has not been the case with the campaigning work done by ICAI regarding a possible reduction in the corporation tax rate in Northern Ireland. This issue came to a head after the then UK Chancellor and now Prime Minister, Gordon Brown, asked Sir David Varney, a former head of Her Majesty’s Revenue and Customs, to conduct a review into taxation policy in Northern Ireland around the time of the restoration of devolved powers.
ICAI prepared a submission to the Varney Report and undertook an extensive lobby with MPs of all parties in Northern Ireland to explain the position ICAI was taking and offering any assistance they might require on the issue. In doing so we have received a steady stream of supportive media coverage in the North and research undertaken by the Ulster Society and the Economic Research Institute in Northern Ireland confirmed there was practically unanimous support for the position taken by the Institute from among members in Northern Ireland.
Given the political issues involved, nobody was surprised when the Varney Report rejected the case for a corporation tax regime in the North akin to that in the South. However, ICAI, led by President Vincent Sheridan, Eamon Donaghy, Chairman of the Northern Ireland Tax Committee and ICAI Head of Tax, Brian Keegan, was not prepared to let the case rest. In February we hosted a meeting of prominent business figures and politicians to rally the forces who continued to believe that only a reduced corporation tax rate would be sufficient to kick start the private sector investment required in Northern Ireland.
We also prepared a rebuttal to the Varney Report and were invited by the Northern Ireland Affairs Committee of the Westminster Parliament to appear before them to explain the case we were making. The President, Eamon Donaghy and Brian Keegan appeared before the committee on February 27th last. The following week the same delegation, this time supported by Angela Reavey, Chairman of the Ulster Society of Chartered Accountants, appeared before the Finance and Personnel Committee of the Northern Ireland Assembly – the day after Dr Paisley confirmed his imminent retirement.
Such was the widespread disappointment at the outcome of the original Varney Report in Northern Ireland the British Government felt compelled at that time to ask Sir David to prepare a second report, specifically on the competitiveness issue in Northern Ireland. ICAI also prepared a lengthy submission to this report with the active participation of the Ulster Society. One of the issues identified at this stage was the need for some additional fiscal incentive from the British Government to coincide with the investment conference being held in May with the support of the US administration. While ICAI remains firmly of the view that a reduced corporation tax rate will be the key tool to drive FDI towards Northern Ireland, we have supported the casefor the introduction of enhanced research and development credits in advance of the conference to stimulate interest in it and ensure its success.
As Chief Executive of the Institute, I am particularly proud of the professionalism our team displayed during this campaign. While we have not been lone contributors to the debate, we have helped mould the arguments and drive it forward. In this case the argument has fortunately taken place in public but I believe it is indicative of how ICAI engages in the public policy process when we believe it affects the business community and our members. In the past, in the South, we have led campaigns against the onerous restrictive nature of the Directors Compliance Statement contained in the 2003 Companies Bill as published.
As our Director of Technical Policy and Representation, Aidan Lambe, made clear in the February issue of Accountancy Ireland there are a number of important issues like auditor liability and regulation of the term ‘accountant’ that we are hopeful of making progress on this year. We await the forthcoming progress report of the Company Law Review Group in this regard. But I am satisfied that we will leave no stone unturned in seeking to ensure that the outcomes on this issue represent the best possible results for our members and the public interest. And to our Varney Report team, as they have become known, all I can say at this stage is ‘well done’.