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| Taxation in the United Kingdom |
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Her Majesty's Revenue and Customs (HMRC) (Welsh: Cyllid a Thollau Ei Mawrhydi) is a non-ministerial department of the British Government primarily responsible for the collection of taxes and the payment of some forms of state support.
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. The department's logo is the St. Edward's Crown enclosed within a circle.
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. 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, payments of Tax Credits, enforcement of the national minimum wage and collection and publication of the trade-in-goods statistics. Responsibility for the protection of the UK's borders passed to the UK Border Agency within the Home Office on 1 April 2008.
HMRC has two overarching Public Service Agreement targets for the period 2008-2011:
- Improve the extent to which individuals and businesses pay the tax due and receive the credits and payments to which they are entitled
- Improve customers' experiences of HMRC and improve the UK business environment
Powers of officers
HMRC is a law enforcement agency which has a strong cadre of Criminal Investigators (c. 2000) responsible for investigating Serious Organised Fiscal Crime. This includes all of the previous HMCE criminal work (other than drug trafficking) such as Tobacco Alcohol and Oils smuggling. They have aligned their previous Customs and Excise powers to tackle previous Inland Revenue criminal offences. They are responsible for seizing (or preventing the loss) of billions of stolen pounds of HMG's revenue. Their skills and resources include the full range of intrusive and covert surveillance and they are a senior partner in the Organised Crime Partnership Board.
HMRC inland detection officers have wide-ranging powers of arrest, entry, search and detention. The main power is to detain anyone who has committed, or who the officer has reasonable grounds to suspect has committed, any offence under the Customs and Excise Acts.
HMRC is also listed under parts of the British Government which contribute to intelligence collection, analysis and assessment. Their prosecution cases may be coordinated with the Police, the Revenue and Customs Prosecution Office or the Crown Prosecution Service.
Governance structure
The Board is composed of members of the Executive Committee and non-executive directors. Its main role is to develop and approve HMRC’s overall strategy, approve final business plans and advise the Chief Executive on key appointments. It also performs an assurance role and advises on best practice.
The Treasury Minister with oversight of HMRC is the Financial Secretary to the Treasury, Mark Hoban MP. Until 28 June 2007 it was the responsibility of the Paymaster General.
Chairmen of HMRC
- Sir David Varney 2005-2007
- Paul Gray 2007-2007
- Dave Hartnett CB (acting) 2007- 31 July 2008
- Mike Clasper 1 August 2008–present
Non-executive board members
Non-executive board members as of September 2009 are:
- Colin Cobain
- Mark Haysom CBE
- Philippa Hird
- Phil Hodkinson
- John Spence
- Dame Sue Street DCB
Merger
The merger of the Inland Revenue and HM Customs & Excise was announced by then 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. Legislation to introduce new information and inspection powers was included in Finance Act 2008 (Schedule 36). The new consolidated penalty regime was introduced via Finance Act 2007 (Schedule 24).
Efficiency gains and job cuts
As part of the Spending Review on 12 July 2004, Gordon Brown estimated that 12,500 jobs would be lost as result of the merger by March 2008, around 14% of the combined headcount of Customs (then around 23,000) and Inland Revenue (then around 68,000). In addition, 2,500 staff would be redeployed to "front-line" activities. Estimates suggest this may save around £300 million in staff costs, out of a total annual budget of £4 billion. There are indications that, after March 2008, a further 12,500 jobs may also be cut.
The total number of job losses included policy functions within the former Inland Revenue and Customs which moved into the Treasury, so that the Treasury became responsible for "strategy and tax policy development" and HMRC took responsibility for "policy maintenance". In addition, certain investigatory functions 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. 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. In May 2009, staff morale in HMRC was the lowest of 11 government departments surveyed.
HMRC maintains that the level of service to its customers will increase by implementation of "Pacesetter" 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.
Performance
HMRC collected £435.7 billion for The Treasury in 2008/09. At the end of March 2009, HMRC was managing 20 million 'open' cases (where the Department’s systems identify discrepancies in taxpayer records or are unable to match a return to a record) which could affect around 4.5 million individuals who may have overpaid in total some £1.6 billion of tax and a further 1.5 million individuals who may have underpaid in total some £400 million of tax.
In 2007-08 HMRC overpaid tax credits to the value of £1 billion; at the end of March 2009, HMRC had £4.4 billion of overpayments to be recovered.
Controversies
Child benefit records scandal
Main article: 2007 UK Child Benefit data scandalOn 20 November 2007 the Chancellor of the Exchequer announced that two discs that held the personal details of all families in the United Kingdom claiming child benefit had gone missing. This is thought to affect approximately 25 million individuals and 7.5 million families in the UK. The missing discs include such personal details as:
- Name
- Date of birth
- National insurance number
- Bank details, where relevant
The ex-chancellor, Alistair Darling has stated that there is no indication that the details have fallen into criminal hands; however, he has urged people to monitor their bank accounts.
IT Problems
In February 2010, HMRC encountered problems following the implementation of their taxes modernisation program called Modernising Pay-as-you-Earn Processes for Customers (MPPC). The IT system was launched in June 2009 and its first real test came in a period known as annual coding. Annual coding issues certain codes to tax payers on a yearly basis. The annual coding process sent out incorrect tax coding notices to some taxpayers and their employers meaning that they would pay too much tax the following year. It was claimed that HMRC knew about the errors were going to occur as early as June 2009.
Underpayments to ethnic minority claimants
In August 2010, seven HMRC staff were sacked for deliberately underpaying benefits to ethnic-minority claimants. Dave Hartnett, permanent secretary for tax at HMRC, said the department operates a zero-tolerance policy on racial discrimination.
Computerisation of tax system
EDS ran the Inland Revenue's tax and national insurance system since 1994. In 2003, the launch of a new tax credit system led to over-payments of £2 billion to over 2 million people. EDS later paid £71.25 million in compensation for the disaster.
In 2004, the contract was rewarded to Capgemini. This contract, also with Fujitsu and BT was one of the biggest ever IT outsourcing contracts at value £2.6 billion.
See also
References
- "HM Revenue and Customs: About Us". Hmrc.gov.uk. 18 April 2005. Retrieved 21 June 2009.
- "Section 138, Customs and Excise Management Act 1979 (c. 2)". Opsi.gov.uk. Retrieved 21 June 2009.
- http://www.hmrc.gov.uk/governance/non-exec.htm
- The joys of crossing a terrier with a retriever (Financial Times, 9 July 2004, subscription required)
- "HM Revenue & Customs:Transforming HMRC - The Regional Review Programme". Hmrc.gov.uk. Retrieved 21 June 2009.
- https://www.gnn.gov.uk/environment/fullDetail.asp?ReleaseID=242751&NewsAreaID=2&NavigatedFromDepartment=False
- Seager, Ashley (17 November 2006). "Union fury over tax office cuts | Business | The Guardian". London: Politics.guardian.co.uk. Retrieved 21 June 2009.
- Reed, Kevin (16 November 2006). "HMRC senior staff concerned over further job cuts". Accountancy Age. Retrieved 21 June 2009.
- "Morale among HMRC workers falls to new low". Accountancy Age. 9 July 2009. Retrieved 9 July 2009.
- HM Revenue & Customs 2008-09 Accounts
- HM Revenue and Customs 2008-09 Accounts: The Comptroller and Auditor General's Standard Report
- ^ "Darling admits 25m records lost". BBC News. 20 November 2007. Retrieved 20 November 2007.
- "BBC News - HMRC staff sacked over race abuse". Retrieved 18 August 2010.
- "Inland Revenue dumps IT provider". BBC News. 11 December 2003. Retrieved 4 May 2010.
- http://www.theregister.co.uk/2009/01/07/eds_hmrc_tax_credit_fail/
- http://www.uk.capgemini.com/aspire/
- http://www.computerweekly.com/Articles/2009/10/30/238366/HMRC-renews-Aspire-deal-to-save-163110m.htm
External links
 | This article's use of external links may not follow Misplaced Pages's policies or guidelines. Please improve this article by removing excessive or inappropriate external links, and converting useful links where appropriate into footnote references. (August 2010) (Learn how and when to remove this message) |
- Official website
- Attorney General's Office - National Fraud Review
- 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)
- The Customs Reviews and Appeals (Tariff and Origin) Regulations 1997
- The Distress for Customs and Excise Duties and Other Indirect Taxes Regulations 1997
- The Public & Commercial Services Union (PCS) Revenue & Customs Web Pages
- Tax Return Deadlines
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