HM Revenue and Customs

HM Revenue and Customs. It is a non-ministerial department of the Government of the United Kingdom responsible for the collection of taxes, the payment of some forms of state support, and the administration of other regulatory regimes including the national minimum wage. Formed from the merger of the Inland Revenue and HM Customs and Excise, it operates under the authority of the Chancellor of the Exchequer and plays a central role in the UK's fiscal policy and economic infrastructure.

History and formation

The department was created on 18 April 2005 under the Commissioners for Revenue and Customs Act 2005, merging two historic agencies. The Inland Revenue, with origins in the Board of Taxes established after the Glorious Revolution, was primarily responsible for direct taxation like income tax. Its counterpart, HM Customs and Excise, traced its history to the medieval King's Customs and was focused on indirect taxes such as value-added tax and duties on goods. The merger, driven by recommendations from a review led by Gus O'Donnell, aimed to modernize tax administration and improve compliance. Key legislative changes, including the Finance Act 2008, have since expanded its powers and scope, integrating functions previously managed by the Department for Work and Pensions related to tax credits.

Structure and governance

HMRC is governed by a board of commissioners, with the chief executive, currently Jim Harra, also serving as the Permanent Secretary to the Treasury. Its operational structure is divided into several customer groups and directorates, including Customer Compliance, Customer Services, and the Solicitor's Office and Legal Services. The department maintains a significant regional presence with large offices in cities like Birmingham, Manchester, and Glasgow, and it works closely with other agencies such as the National Crime Agency and the Serious Fraud Office. Oversight is provided by parliamentary committees, notably the Public Accounts Committee and the Treasury Select Committee, while the Adjudicator's Office handles complaints.

Functions and responsibilities

Its primary function is to collect and administer the UK's tax system, which includes direct taxes like Corporation Tax and Capital Gains Tax, and indirect taxes including Stamp Duty and Insurance Premium Tax. HMRC also administers the system of Child Benefit and Tax Credits, enforces the National Minimum Wage in partnership with the Department for Business and Trade, and manages the UK's Border Force operations relating to customs controls. Furthermore, it is responsible for tackling illicit trade, enforcing sanctions, and implementing international agreements like the Common Reporting Standard developed by the Organisation for Economic Co-operation and Development.

Tax collection and administration

The department collects revenue through systems like Pay As You Earn for income tax and processes annual self-assessment returns for individuals and businesses. It oversees the collection of Value Added Tax from registered businesses and administers duties on tobacco, alcohol, and hydrocarbon oils. Key initiatives include the Making Tax Digital programme, which mandates digital record-keeping, and the Offshore, Corporate and Wealthy compliance unit targeting complex evasion. HMRC also manages the Double Taxation Relief agreements with countries like the United States and France, and enforces the Diverted Profits Tax aimed at multinational enterprises.

Enforcement and compliance

HMRC possesses significant investigative and enforcement powers granted by statutes like the Finance Act 2016 and the Proceeds of Crime Act 2002. Its Fraud Investigation Service works on cases of serious tax evasion and money laundering, often in conjunction with the Crown Prosecution Service. The department conducts compliance checks, issues penalties, and can pursue civil recovery of unpaid taxes through tribunals like the First-tier Tribunal (Tax Chamber). Notable enforcement actions have involved cases against large corporations such as Google and Starbucks, and it operates the Contractual Disclosure Facility for those wishing to disclose tax fraud.

Digital services and transformation

A major strategic focus is the digital transformation of the UK tax system, centered on the Making Tax Digital initiative. This requires businesses and landlords to use compatible software for record-keeping and VAT returns. HMRC has developed online services like the Personal Tax Account and the Business Tax Account, and it utilizes advanced analytics and data science to identify tax gaps and non-compliance. The department's technology is supported by major contracts with IT firms like Capgemini and Accenture, and it continues to modernize its legacy systems inherited from the Inland Revenue and HM Customs and Excise. Category:Revenue services Category:Government agencies established in 2005 Category:Taxation in the United Kingdom