The government is to delay a decision on whether to devolve the right to set corporation tax rates to the Northern Ireland executive, over concerns that such a move could influence the forthcoming Scottish referendum on independence.

A Treasury consultation on the issue began two years ago and a final government decision was due last summer. However, following talks with Northern Ireland representatives yesterday, David Cameron announced that a decision will not now be made until autumn 2014.

Peter Robinson and Martin McGuiness, Northern Ireland's first and deputy first minister, who were at the meeting, said they were 'disappointed' by the news.

Cutting the level of corporation tax has been widely viewed as an important element in kick-starting the Northern Ireland economy, by making the region more competitive and stimulating investment.

However, Malachy McLernon, chair of CIOT's Northern Ireland branch, said a reduction in corporation tax would not be 'a one-way bet'.

'Cutting corporation tax will leave a shortfall in our region's finances. Additionally, firms that operate across the UK would face an additional administrative burden, requiring them to spend time calculating the profits earned in Northern Ireland separate from those earned elsewhere in the UK.

'There would also be enforcement issues for HMRC, who would need to make sure businesses are not wrongly assigning profits to NI rather than the rest of the UK to save money. It is essential that our politicians making a decision on whether to vary from the UK rate understand all the technical and practical issues involved,' McLernon said.

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