Her Majesty's Revenue and Customs

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Part of the HMRC complex in Nottingham.
Part of the HMRC complex in Nottingham.

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, UK frontier protection 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.

Contents

[edit] 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 and for protection of the UK's borders against import or export of illicit materials such as drugs or counterfeit goods. 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

HMRC collected £404 billion for The Treasury in 2005/06[1].

[edit] Governance structure

HMRC is governed by a board comprising executive chairman Paul Gray and eight other executive members drawn from the former Inland Revenue, HM Customs & Excise and from external organisations. The board, known internally as ExCom, also contains five non-executive directors.

The Paymaster General, Dawn Primarolo, is the Government minister accountable for HMRC.

[edit] 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".[2] 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.

[edit] 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.

The total number of job losses includes policy functions within the Inland Revenue and Customs which have moved 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 have moved to the new Serious Organised Crime Agency, as well as prosecutions moving to the new Revenue and Customs Prosecution Office.

A further programme of job cuts and office closures was announced on 16 November 2006.[1][2] Whilst some of the offices closed will be in bigger cities where other offices already exist, many will be in local, rural areas, where there is no other HMRC presence. The numbers of job reductions and office closures has not been officially announced, but the proposals imply that up to 200 offices will close and a further 12,500 jobs will be lost from 2008 to 2011.[3] [4]

HMRC maintains however that despite these changes, the level of service to its customers will actually increase by implementation of "lean" processes designed to improve efficiency, introducing better technology, better use of its offices and a much stronger focus on the needs of the "customer" - taxpayers, benefit claimants and other members of the public who use HMRC's services.

[edit] References

  1. ^ http://www.nao.org.uk/pn/05-06/05061159.htm
  2. ^ The joys of crossing a terrier with a retriever (Financial Times, 9 July 2004, subscription required)

[edit] See also

  • Customs Act 1860 c. 22
  • Customs Act 1860 c. 36
  • Customs Consolidation Act 1860 c. 110
  • Customs and Inland Revenue Act 1861 c. 20
  • Customs and Inland Revenue Act 1863 c. 22
  • Isle of Man Customs, Harbours, and Public Purposes Act 1866 c. 23
  • Customs Act 1867 c. 82
  • Customs and Inland Revenue Act 1867 c. 23
  • Isle of Man Customs Duties Act 1867 c. 86
  • Customs and Excise Warehousing Act 1869 c. 103
  • Burgh Customs (Scotland) Act 1870 c. 42
  • Customs (Isle of Man) Act 1870 c. 12
  • Customs Refined Sugar Duties (Isle of Man) Act 1870 c. 43
  • Customs and Inland Revenue Act 1870 c. 32
  • Customs and Income Tax Act 1871 c. 21
  • Customs and Inland Revenue Act 1872 c. 20
  • Customs Sugar Duties (Isle of Man) Act 1873 c. 29
  • Customs and Inland Revenue Act 1873 c. 18
  • Customs (Isle of Man) Tariff Act 1874 c. 46
  • Customs and Inland Revenue Act 1874 c. 16
  • Customs and Inland Revenue Act 1875 c. 23
  • Customs Consolidation Act 1876 c. 36
  • Customs Tariff Act 1876 c. 35
  • Customs and Inland Revenue Act 1876 c. 16
  • Customs and Inland Revenue, Amendment Act 1877 c. 10
  • Customs, Inland Revenue, and Savings Banks Act 1877 c. 13
  • Customs and Inland Revenue Act 1878 c. 15
  • Burgh, Scotland (Petty Customs), Act 1879 c. 13
  • Customs Buildings Act 1879 c. 36
  • Customs and Inland Revenue Act 1879 c. 21

[edit] External links

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