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Revision as of 23:56, 12 July 2006 by Vegaswikian (talk | contribs) (→External links: cat)(diff) ← Previous revision | Latest revision (diff) | Newer revision → (diff)Her Majesty's Revenue and Customs (HMRC) is a non-ministerial department of the British Government primarily responsible for the collection of taxes, some forms of state support, and import controls.
HMRC was formed by a merger of the Inland Revenue and Her Majesty's Customs and Excise and came into formal existence on 18 April, 2005.
Departmental responsibilities
The department is responsible for the administration and collection of direct taxes including income tax and corporation tax, capital taxes such as capital gains tax and inheritance tax, indirect taxes (including value added tax), excise duties and stamp duty land tax, and environmental taxes such as air passenger duty and the climate change levy. HMRC is also the primary agency responsible for import and export controls for goods and services. Other aspects of the department's responsibilities include National Insurance contributions, the distribution of child benefit and some other forms of state support including the Child Trust Fund, and enforcement of the national minimum wage.
HMRC has three targets for the period 2005-2008:
- to improve the extent to which individuals and businesses pay the amount of tax due and receive the credits and payments to which they are entitled
- to improve customer experience, support business and reduce the compliance burden
- to strengthen frontier protection against threats to the security, social and economic integrity and environment of the United Kingdom in a way that balances the need to maintain the UK as a competitive location in which to do business
Governance structure
HMRC is governed by a board comprising executive chairman David Varney, deputy chairman Paul Gray and eight other executive members drawn from the Inland Revenue, HM Customs & Excise and from external organisations. The board also contains five non-executive directors.
Merger
The merger of the Inland Revenue and HM Customs & Excise was announced by Chancellor of the Exchequer Gordon Brown in the Budget on 17 March, 2004. The name for the new department and its first executive chairman, David Varney, were announced on 9 May, 2004. Varney joined the nascent department in September 2004, and staff started moving from Somerset House and New Kings Beam House into HMRC's new headquarters building at 100 Parliament Street in Whitehall on 21 November 2004.
The planned new department was announced formally in the Queen's Speech of 2004 and a bill, the Commissioners for Revenue and Customs Bill, was introduced into the House of Commons on 24 September 2004, and received Royal Assent as the Commissioners for Revenue and Customs Act 2005 on 7 April 2005. The Act also creates a Revenue and Customs Prosecutions Office (RCPO) responsible for the prosecution of all Revenue and Customs cases.
The old Inland Revenue and Customs & Excise departments had very different historical bases, internal cultures and legal powers. The merger was described by the Financial Times on 9 July, 2004, as "mating the C&E terrier with the IR retriever". For an interim period officers of HMRC are empowered to use existing Inland Revenue powers in relation to matters within the remit of the old Inland Revenue (such as income tax, stamp duty and tax credits) and existing Customs powers in relation to matters within the remit of the old Customs & Excise (such as value added tax and excise duties). However, a major review of the powers required by HMRC was announced at the time of the 2004 Pre-Budget Report on 9 December 2004, covering the suitability of existing powers, new powers that might be required, and consolidating the existing compliance regimes for surcharges, interest, penalties and appeal, which may lead to a single, consolidated enforcement regime for all UK taxes, and a consultation document was published after the 2005 Budget on 24 March 2005.
Efficiency gains and job cuts
As part of the Spending Review on 12 July, 2004, Gordon Brown estimated that 12,500 jobs will be lost as result of the merger by March 2008 around 14% of the combined headcount of Customs (around 23,000) and Inland Revenue (around 68,000). In addition, 2,500 staff will be redeployed to "front-line" activities. This will save around £300 million in staff costs, out of a total annual budget of £4 billion (by way of comparison, the Inland Revenue and Customs together collect over £400 billion each year).
The total number of job losses includes policy functions within the Inland Revenue and Customs (around 250 posts) that will move into the Treasury, so that the Treasury becomes responsible for "strategy and tax policy development" and HMRC handles "policy maintenance". In addition, certain investigatory functions (around 1,500 posts) were expected to move to the new Serious Organised Crime Agency, as well as prosecutions moving to the new Revenue and Customs Prosecution Office.
References
- The joys of crossing a terrier with a retriever (Financial Times, 9 July, 2004, subscription required)
External links
- HMRC website
- Commissioners for Revenue and Customs Act 2005
- Treasury Press Release (13 May 2004)
- Treasury Press Release (12 July 2004)
- Treasury Press Release (25 November 2004)
- HM Revenue and Customs and the Taxpayer: Modernising Powers, Deterrents and Safeguards (Consultation document, 24 March 2005)