HM Revenue and Customs

HM Revenue and Customs
Agency name	HM Revenue and Customs
Formed	2005
Preceding1	Inland Revenue
Preceding2	HM Customs and Excise
Headquarters	London
Employees	61,000 (approx.)
Minister1 name	Chancellor of the Exchequer
Chief1 name	Permanent Secretary

HM Revenue and Customs is the United Kingdom’s tax authority formed in 2005 by the merger of the Inland Revenue and HM Customs and Excise. It administers direct and indirect taxation, National Insurance contributions, and the payment of certain welfare and tax credits, interacting with institutions such as the HM Treasury and the National Audit Office. The department operates across the United Kingdom with regional offices in Belfast, Cardiff, Birmingham, and Glasgow.

History

The origins trace to legacy bodies including the Board of Inland Revenue, the Excise, and the Customs House. The 2005 merger followed reviews influenced by examples like organisational reforms at the Internal Revenue Service and restructuring initiatives referenced in reports by the National Audit Office. Predecessors administered fiscal mechanisms established in statutes such as the Income Tax Act 1842 and customs frameworks evolving since the era of the Navigation Acts. Major historical events shaping practice included wartime fiscal measures during the First World War and Second World War, postwar reconstruction policies under Clement Attlee, and neoliberal reforms associated with administrations of Margaret Thatcher and John Major. Recent decades saw adaptation after crises like the 2008 financial crisis and legislative shifts from the Finance Act series.

Organisation and structure

The body is governed by ministers reporting to the Chancellor of the Exchequer and administered by a senior executive including a Permanent Secretary and Commissioners. Corporate divisions mirror functions: Customer Compliance Group, Legal Group, Strategy and Transformation, and regional directorates in Northern Ireland, Scotland, and Wales. It engages with external stakeholders including the Institute for Fiscal Studies, Chartered Institute of Taxation, Low Incomes Tax Reform Group, and private-sector firms such as the Big Four accounting firms (e.g., Deloitte, PwC, KPMG, Ernst & Young). Oversight involves bodies like the Parliamentary and Health Service Ombudsman and scrutiny from select committees of the House of Commons and House of Lords.

Functions and responsibilities

Primary responsibilities include administering income tax, Value Added Tax, Corporation Tax, and Capital gains tax, collecting National Insurance, and managing tax credits and Child Benefit. It implements compliance measures under legislation such as successive Finance Acts and enforces duties framed by international instruments negotiated with partners including the Organisation for Economic Co-operation and Development, the European Union (historically), and bilateral double taxation treaties with states like the United States, France, Germany, and China. The organisation supports policy delivery for programmes linked to the Department for Work and Pensions and liaises with agencies like the Driver and Vehicle Licensing Agency for data exchange.

Revenue collection and tax administration

Revenue streams cover income tax, Value Added Tax, Excise duties, Corporation Tax, Stamp Duty Land Tax, and customs duties at ports and borders such as Port of Dover and Heathrow Airport. Tax administration employs systems for self assessment, PAYE introduced under historic reforms, and digital services modelled alongside initiatives like the Making Tax Digital programme. Interaction with businesses includes customs declarations under standards related to the World Customs Organization and collaboration with trade bodies such as the Confederation of British Industry and the Federation of Small Businesses.

Enforcement and compliance

Enforcement ranges from civil investigations to criminal prosecutions pursued in coordination with the Crown Prosecution Service and the Serious Fraud Office for serious tax fraud. Powers derive from statutes including the Proceeds of Crime Act 2002 and procedural rules applied in courts such as the Crown Court and High Court of Justice. Historic anti-evasion campaigns have referenced actions taken against organised avoidance schemes and coordination with international efforts like Common Reporting Standard exchanges and Base erosion and profit shifting initiatives championed by the OECD.

Technology and operations

Operations rely on IT systems for case management, customs processing (e.g., CHIEF successor systems), and the public-facing digital tax accounts portal introduced alongside broader e-government reforms inspired by practices in jurisdictions such as Estonia and platforms like the Gov.uk service. Technology investments have involved suppliers including Capita, BT Group, and software vendors operating in sectors serving financial services and retail. Cybersecurity and data protection are managed in line with obligations under statutes like the Data Protection Act 2018 and oversight by the Information Commissioner's Office.

Criticism and controversies

The organisation has faced scrutiny over data handling incidents, customer service performance, the implementation of policies such as Universal Credit interfaces, and controversies over historical investigations into individuals and firms similar to disputes involving LuxLeaks and high-profile tax avoidance cases involving multinational firms. Parliamentary inquiries by the Public Accounts Committee and high-profile legal challenges in courts including the Supreme Court of the United Kingdom have shaped reforms. Debates continue around transparency, proportionality of enforcement, and interaction with international tax planning aspects exemplified by cases studied by Transparency International.

Category:United Kingdom government departments Category:Taxation in the United Kingdom