Her Majesty's Revenue and Customs (HMRC) (Welsh Welsh is a member of the Brythonic branch of the Celtic languages spoken natively in Wales, in England by some along the Welsh border, in the Welsh immigrant colony in the Chubut Valley in Argentine Patagonia, and the United States, Canada, Australia and New Zealand: Cyllid a Thollau Ei Mawrhydi) is a non-ministerial A non-ministerial government department is a department or ministry of a government that is not headed by a Government Minister or Government Secretary, and answers directly to a legislature department Her Majesty's Government of the United Kingdom contains a number of Ministers and Secretaries of State. These members of the Cabinet are supported by civil servants in Ministerial Departments of the British Government The phrase Her Majesty's Government is a synonym for the governments of various jurisdictions within the Commonwealth realms. In use since at least the height of the British Empire, the phrase has been inherited and integrated into the countries that emerged from that polity primarily responsible for the collection of taxes To tax is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law and the payment of some forms of state support.

HMRC was formed by a merger of the Inland Revenue The Inland Revenue was, until April 2005, a department of the British Government responsible for the collection of direct taxation, including income tax, national insurance contributions, capital gains tax, inheritance tax, corporation tax, petroleum revenue tax and stamp duty. More recently, the Inland Revenue also administered the Tax Credits and Her Majesty's Customs and Excise and came into formal existence on 18 April 2005.[1] The department's logo is the St. Edward's Crown St Edward's Crown was one of the English Crown Jewels and remains one of the senior British Crown Jewels. It is the official coronation crown used in the coronation of a new monarch. It is mainly the same as the crown made in 1661 for the coronation of the restored King Charles II, to replace the crown destroyed under Oliver Cromwell's order enclosed within a circle.

Contents

Departmental responsibilities

The department is responsible for the administration and collection of direct taxes In the general sense, a direct tax is one paid directly to the government by the persons on whom it is imposed (often accompanied by a tax return filed by the taxpayer). Examples include some income taxes, some corporate taxes, and transfer taxes such as estate (inheritance) tax and gift tax. In this sense, a direct tax is contrasted with an including income tax An income tax is a tax levied on the income of individuals or business . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual and corporation tax Corporation tax is a tax levied in the United Kingdom on the profits made by companies and on the profits of permanent establishments of non-UK resident companies and associations that trade in the EU. Prior to the tax's enactment on 1 April 1965, companies and individuals paid the same income tax, with an additional profits tax levied on, capital taxes such as capital gains tax A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for and inheritance tax An inheritance tax is a tax which arises on the death of an individual. It is a tax on the estate, or total value of the money and property, of a person who has died. In international tax law, there is a distinction between an estate tax and an inheritance tax: an estate tax taxes the personal representatives of the deceased, while an inheritance, indirect taxes In the colloquial sense, an indirect tax (such as sales tax, value added tax , or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the customer). The intermediary later files a tax return and forwards the tax proceeds to (including value added tax Value added tax is similar to a sales tax. It is a tax on the estimated market value added to a product or material at each stage of its manufacture or distribution, ultimately passed on to the consumer. Maurice Lauré, Joint Director of the French Tax Authority, the Direction générale des impôts, was first to introduce VAT on April 10, 1954,), excise duties An excise or excise tax may be defined broadly as an inland tax on the production or sale of a good, or narrowly as a tax on a good produced within the country. Excises are distinguished from customs duties, which are taxes on importation. Excises, whether broadly defined or narrowly defined, are inland taxes, whereas customs duties are border and stamp duty land tax In the United Kingdom, stamp duty is a form of tax charged on instruments , and requires a physical stamp to be attached to or impressed upon the instrument in question. The more modern versions of the tax no longer require a physical stamp, and environmental taxes such as air passenger duty and the climate change levy The Climate Change Levy is a tax on energy delivered to non-domestic users in the United Kingdom. Its aim is to provide an incentive to increase energy efficiency and to reduce carbon emissions, however there have been ongoing calls to replace it with a proper carbon tax. Other aspects of the department's responsibilities include National Insurance National Insurance in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits. It was first introduced by the National Insurance Act 1911, and expanded by the government of Clement Attlee in 1946 contributions, the distribution of child benefit and some other forms of state support including the Child Trust Fund, payments of Tax Credits Within the Australian, Canadian, United Kingdom, and United States tax systems, a tax credit is a recognition of partial payment already made towards taxes due. A similar concept exists in the French tax system, for example in the Credit Impot Recherche. This situation arises, for example, when standard rate tax has been deducted at source (", enforcement of the national minimum wage A minimum wage is the lowest hourly, daily or monthly wage that employers may legally pay to employees or workers. Equivalently, it is the lowest wage at which workers may sell their labor. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about the benefits and drawbacks of a minimum wage[2] and collection and publication of the trade-in-goods statistics[3]. Responsibility for the protection of the UK's borders passed to the UK Border Agency within the Home Office The Home Office is the United Kingdom government department responsible for immigration control, security and order. As such it is responsible for the police, United Kingdom Borders Agency and MI5. It is also in charge of government policy on security-related issues such as drugs, counter-terrorism and ID cards. It was formerly responsible for the on 1 April 2008.

HMRC has two overarching Public Service Agreement targets for the period 2008-2011:

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.[4]

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 police are persons empowered to enforce the law, protect property and reduce civil disorder. Their powers include the legitimized use of force. The term is most commonly associated with police services of a state that are authorized to exercise the police power of that state within a defined legal or territorial area of responsibility. Police, the Revenue and Customs Prosecution Office or the Crown Prosecution Service The Crown Prosecution Service, or CPS, is a non-ministerial department of the Government of the United Kingdom responsible for public prosecutions of people charged with criminal offences in England and Wales. Its role is similar to that of the longer-established Crown Office in Scotland, and the Public Prosecution Service in Northern Ireland. The.

Governance structure

HMRC occupies an office complex in the city of Nottingham Nottingham ( /ˈnɒtɪŋəm/ ) is a city and unitary authority area in the East Midlands region of the United Kingdom. It is located in the ceremonial county of Nottinghamshire, and is one of eight members of the English Core Cities Group. Whilst the City of Nottingham has a historically tightly drawn boundary which accounts for its relatively.

The Board is composed of members of the Executive Committee and non-executive directors A non-executive director or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. They are differentiated from inside directors, who are members of the board who also serve or previously served. 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 HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy. The Treasury maintains the Combined Online Information System containing a detailed analysis of departmental spending under with oversight of HMRC is the Financial Secretary to the Treasury, Stephen Timms MP. Until 28 June 2007 it was the responsibility of the Paymaster General HM Paymaster General is a ministerial position in the United Kingdom. The Paymaster General is in charge of the Office of HM Paymaster General , which holds accounts at the Bank of England on behalf of Government departments and selected other public bodies. Funds which are made available from the Consolidated Fund are then channelled into OPG.

Chairmen of HMRC

Non-executive board members

Non-executive board members [5] as at September 2009 are:

Merger

The merger of the Inland Revenue and HM Customs & Excise was announced by then Chancellor of the Exchequer The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called The Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the Treasury in other nations. The position is considered Gordon Brown James Gordon Brown is a British Labour Party politician, who has been a Member of Parliament (MP) since 1983, currently for Kirkcaldy and Cowdenbeath. He served as the Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 until 2010. Brown became Prime Minister in June 2007, after the resignation of Tony Blair and three in the Budget A budget is generally a list of all planned expenses and revenues. It is a plan for saving and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organizational plan stated in monetary terms 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 Somerset House is a large building situated on the south side of the Strand in central London, England, overlooking the River Thames, just east of Waterloo Bridge. The central block of the Neoclassical building, the outstanding project of the architect Sir William Chambers, dates from 1776–96. It was extended by classical Victorian wings to and New Kings Beam House into HMRC's new headquarters building at 100 Parliament Street in Whitehall Whitehall is a road in Westminster in London, England. It is the main artery running north from Parliament Square, towards traditional Charing Cross, now at the southern end of Trafalgar Square and marked by the statue of Charles I, which is often regarded as the heart of London. Recognised as the centre of HM Government, the road is lined with on 21 November 2004.

The planned new department was announced formally in the Queen's Speech of 2004 and a bill A bill is a proposed law under consideration by a legislature. A bill does not become law until it is passed by the legislature and, in most cases, approved by the executive. Once a bill has been enacted into law, it is called an act or a statute, the Commissioners for Revenue and Customs Bill, was introduced into the House of Commons The House of Commons is the lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords . Both Commons and Lords meet in the Palace of Westminster. The Commons is a democratically elected body, consisting of 650 members, who are known as "Members of Parliament" (MPs). Members are elected on 24 September 2004, and received Royal Assent The granting of Royal Assent is the formal method by which a constitutional monarch completes the legislative process of lawmaking by formally assenting to an Act of Parliament. While the power to withhold Royal Assent was once exercised often, it is exceedingly rare in the modern, democratic political atmosphere that has developed since the 18th 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 The prosecutor is the chief legal representative of the prosecution in countries with either the common law adversarial system, or the civil law inquisitorial system. The prosecution is the legal party responsible for presenting the case in a criminal trial against an individual suspected of breaking the law 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 The Financial Times is a British international business newspaper. It is a morning daily newspaper published in the Borough of Southwark, London and printed at 22 sites. Its primary rival is New York City-based The Wall Street Journal on 9 July 2004, as "mating the C&E terrier with the IR retriever".[6] 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 An income tax is a tax levied on the income of individuals or business . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual, stamp duty Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as: cheques; receipts; military commissions; marriage licences; land transactions; etc. A physical stamp had to be attached to or impressed upon the document to denote that stamp duty had been paid before the document was legally and tax credits Within the Australian, Canadian, United Kingdom, and United States tax systems, a tax credit is a recognition of partial payment already made towards taxes due. A similar concept exists in the French tax system, for example in the Credit Impot Recherche. This situation arises, for example, when standard rate tax has been deducted at source (") and existing Customs powers in relation to matters within the remit of the old Customs & Excise (such as value added tax Value added tax is similar to a sales tax. It is a tax on the estimated market value added to a product or material at each stage of its manufacture or distribution, ultimately passed on to the consumer. Maurice Lauré, Joint Director of the French Tax Authority, the Direction générale des impôts, was first to introduce VAT on April 10, 1954, and excise duties An excise or excise tax may be defined broadly as an inland tax on the production or sale of a good, or narrowly as a tax on a good produced within the country. Excises are distinguished from customs duties, which are taxes on importation. Excises, whether broadly defined or narrowly defined, are inland taxes, whereas customs duties are border). 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

Headquarters are at 100 Parliament Street, Westminster The City of Westminster (pronounced /ˈwɛstmɪnstər/ ) is a London borough occupying much of the central area of London, England, including most of the West End. It is located to the west of and adjoining the ancient City of London, and its southern boundary is the River Thames. It is an Inner London borough and was created in 1965 when Greater

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 HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy. The Treasury maintains the Combined Online Information System containing a detailed analysis of departmental spending under, 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.[7][8] 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.[9][10] In May 2009, staff morale Job satisfaction describes how content an individual is with his or her job. The happier people are within their job, the more satisfied they are said to be. Job satisfaction is not the same as motivation, although it is clearly linked. Job design aims to enhance job satisfaction and performance, methods include job rotation, job enlargement and in HMRC was the lowest of 11 government departments surveyed.[11]

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 HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy. The Treasury maintains the Combined Online Information System containing a detailed analysis of departmental spending under 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.[12]

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.[13]

Child benefit records scandal

Main article: 2007 UK Child Benefit data scandal

On the 20 November 2007 the Chancellor of the Exchequer The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called The Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the Treasury in other nations. The position is considered announced that two discs A CD-R is a variation of the Compact Disc invented by Philips and Sony. CD-R is a Write Once Read Many (WORM) optical medium, though the whole disk does not have to be entirely written in the same session that held the personal details of all families in the United Kingdom The United Kingdom of Great Britain and Northern Ireland[note 7] is a sovereign state located off the northwestern coast of continental Europe. It is an island country, spanning an archipelago including Great Britain, the northeastern part of the island of Ireland, and many small islands. Northern Ireland is the only part of the UK with a land claiming child benefit had gone missing.[14] 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:

The 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.[14]

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)[3]. 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.

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