Brstjjy

Her Majesty's Revenue and Customs
Welsh: Cyllid a Thollau Ei Mawrhydi

Non-ministerial government department overview
Formed	18 April 2005; 13 years ago (2005-04-18)
Preceding agencies	Inland Revenue HM Customs and Excise
Type	Revenue Department
Jurisdiction	United Kingdom
Headquarters	100 Parliament Street, London, SW1A 2BQ
Employees	56,000[1]FTE
Annual budget	£4.09bn (2009–2010) [2]
Minister responsible	Mel Stride MP, Financial Secretary to the Treasury and Minister responsible for HMRC
Non-ministerial government department executive	Jon Thompson, Chief Executive
Child Non-ministerial government department	Valuation Office Agency
Key document	Commissioners for Revenue and Customs Act 2005
Website	gov.uk/hmrc

Taxation in the United Kingdom
UK Government Departments
HM Treasury HM Revenue and Customs
UK Government
VAT Income tax National Insurance Corporation tax Capital gains tax Motoring taxes Inheritance tax Stamp duty Insurance Premium Tax Air Passenger Duty PAYE
Scottish Government
Revenue Scotland Scottish income tax Land and Buildings Transaction Tax Scottish Landfill Tax Air Departure Tax
Welsh Government
Welsh Revenue Authority Welsh Rates of Income Tax Land Transaction Tax Landfill Disposals Tax
Local Government
Council Tax Domestic rates in Northern Ireland Business rates in England Business rates in Wales Business rates in Scotland Business rates in Northern Ireland
v t e

Her Majesty's Revenue and Customs (HM Revenue and Customs or HMRC)^[3] is a non-ministerial department of the UK Government 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.

HMRC was formed by the merger of the Inland Revenue and Her Majesty's Customs and Excise, which took effect on 18 April 2005.^[4] 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, Corporation Tax, Capital Gains Tax (CGT) and Inheritance Tax (IHT), indirect taxes including Value Added Tax (VAT), excise duties and Stamp Duty Land Tax (SDLT), and environmental taxes such as Air Passenger Duty and the Climate Change Levy. Other aspects of the department's responsibilities include National Insurance Contributions (NIC), 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,^[5] administering anti-money laundering registrations for Money Service Businesses^[6] and collection and publication of the trade-in-goods statistics.^[7] Responsibility for the protection of the UK's borders passed to the UK Border Agency within the Home Office on 1 April 2008 and then to UK Border Force and the National Crime Agency in 2013.

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 but used to include this up until 2008) 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 criminal investigation officers have wide-ranging powers of arrest, entry, search and detention. The main power is to detain anyone who has committed, or whom the officer has reasonable grounds to suspect has committed, any offence under the Customs and Excise Acts as well as related fraud offences.^[8]

On 30 June 2006, under the authority of the new Labour Home Secretary, John Reid, extensive new powers were given to HMRC. Under Chairman Sir David Varney, a new Criminal Taxes Unit of senior tax investigators was created to target suspected fraudsters and criminal gangs. To disrupt and clamp down on criminal activity. This HMRC/CTU would pursue suspects in the same way the US Internal Revenue Service caught out Al Capone on tax evasion. These new powers included the ability to impose penalties without needing to prove the guilt of suspected criminals; extra powers to use sophisticated surveillance techniques, and for the first time, to have the same ability as Customs Officers to monitor suspects and arrest them.^[9] On 19 July 2006, the Executive Chairman of HMRC, Sir David Varney resigned.^[10]

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 or the Crown Prosecution Service.

Structure

The department is organised around four operational groups, each led by a director general. The four operational groups are:^[11]

• 
  Personal Tax
  
  • led by Mike Baker
  
  

• 
  Benefits and Credits
  
  • led by Nick Lodge^[12]
    
  
  


• 
  Business Tax
  
  • led by Jim Harra^[12]
    
  
  


• 
  Customer Compliance
  
  • led by Penny Ciniewicz^[12]
    
  
  

In addition to the four operational groups, there are five supporting groups. These are:^[11]

• Permanent Secretary for Tax group


• Chief Finance Officer group


• Chief information Officer group


• General Counsel and Solicitor group


• Chief People Officer group

HMRC deals with the top 2,000 large business via CRM (Customer Relationship Managers). The next 8,400 business are dealt with via Customer Co-ordinators who provide a single point of contact with HMRC.^[13]

History

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.

Headquarters are at 100 Parliament Street, Westminster

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".^[14] 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).

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 suggested this may save around £300 million in staff costs, out of a total annual budget of £4 billion.

Logo of HMRC until 2013

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.^[15][16] 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 were to be lost from 2008 to 2011.^[17][18] In May 2009, staff morale in HMRC was the lowest of 11 government departments surveyed.^[19]

In 2013, HMRC began to introduce an update to the PAYE system, which meant it would receive information on tax and employee earnings from employers each month, rather than at the end of a tax year. A trial of the new system began in April 2012, and all employers switched by October 2013.^{[20][needs update]}

In 2012 Revenue Scotland was formed and on 1 April 2015 it took HMRC responsibility to collect devolved taxes in Scotland.^[21] In 2015 Welsh Revenue Authority was formed and on 1 April 2018 it took HMRC responsibility to collect devolved taxes in Wales.

On 12 November 2015 HMRC proposed to replace local offices with 13 regional centres by 2027.^[22][23]

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 responsible for HMRC is the Financial Secretary to the Treasury, Mel Stride MP.^[24]

Chief Executive

The Chief Executive is also the Permanent Secretary for HMRC and the Accounting Officer.

• Dame Lesley Strathie 2008 – 2011


• Dame Lin Homer 2012 – 2016^[25]
  


• 
  Sir Jon Thompson 2016 – Present

Jon Thompson, formerly Permanent Secretary of the Ministry of Defence, succeeded Lin Homer as Chief Executive in April 2016.^[26]

Chairman

The Chairman of HMRC was an executive role until 2008. Mike Clasper served as a non-executive Chairman. From August 2012, the post was abolished with a 'lead non-executive director' chairing Board meetings instead.

• Sir David Varney April 2005– August 2006


• 
  Paul Gray (acting) September 2006 – February 2007 and (confirmed) February 2007 – November 2007


• 
  Dave Hartnett CB (acting) 2007– 31 July 2008


• 
  Mike Clasper CBE 1 August 2008 – 1 August 2012

Executive Chair and Permanent Secretary

• 
  Sir Edward Troup April 2016 – Present

Non-executive board members

Non-executive board members^[27] as of January 2013 are:

• Ian Barlow (lead non-executive director)


• Volker Beckers


• Colin Cobain


• Edwina Dunn


• Philippa Hird


• Phil Hodkinson


• Norman Pickavance


• John Whiting

Personnel

• Permanent Secretary


• Director General


• Director


• Deputy Director


• Grade 6


• Grade 7


• Senior Officer


• Higher Officer


• Officer


• Assistant Officer


• Administrative Assistant

Source:^[28]

See: Her Majesty's Civil Service#Grading schemes, for details.

HM Revenue and Customs Rank Badges of Uniformed Staff

Grade	Assistant Officer	Officer	Higher Officer	Senior Officer
Police Equivalent [29]	Constable	Sergeant	Inspector Chief Inspector	Superintendent
Badge

Performance

HMRC estimated tax gaps 2005/6-2014/5 (the difference between the amount of tax that should, in theory, be collected by HMRC, against what is actually collected.)^[30]

HMRC collected £557 billion for the Treasury in 2016/17.^[30] It estimated that total theoretical tax liabilities in that year were £590 billion, but £33 billion was not collected due to the "tax gap", made up of money lost to tax evasion, tax avoidance, error and unpaid tax debts. This equates to a collection rate of 94.3% (up from 92.7 in 2005-6).^[31] 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.^[32]

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.^[33]

Controversies

Child benefit records misplacement

On 20 November 2007 the Chancellor of the Exchequer, Alistair Darling, announced that two discs that held the personal details of all families in the United Kingdom claiming child benefit had gone missing.^[34] This is thought to affect approximately 25 million individuals and 7.5 million families in the UK. The missing discs include personal details such as name, date of birth, National Insurance number, and bank details.

The then Chancellor, stated that there was no indication that the details had fallen into criminal hands; however, he urged people to monitor their bank accounts.^[34]

IT problems

EDS ran the Inland Revenue's tax and National Insurance system
from 1994 to 2004.^[35] In 2003, the launch of a new tax credit system led to over-payments of £2 billion to over two million people. EDS later paid £71.25 million in compensation for the disaster.^[36] In 2004, the contract was awarded to Capgemini.^[37] This contract, also
with Fujitsu and BT, was one of the biggest ever IT outsourcing contracts, at a value of £2.6 billion.^[38]

In February 2010, HMRC encountered problems following the implementation of their taxes modernisation program called Modernising Pay-as-you-Earn Processes for Customers (MPPC).^[39] 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.^[40] It was claimed^{[by whom?]} that HMRC knew 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.^[41] Dave Hartnett, permanent secretary for tax at HMRC, said the department operates a zero-tolerance policy on racial discrimination.

Goldman Sachs deal and surveillance of Osita Mba

The whistleblower Osita Mba revealed to The Guardian that HMRC entered a deal with Goldman Sachs which allowed Goldman Sachs to escape paying £10 million interest on unpaid tax.^[42] Following this HMRC used powers under the Regulation of Investigatory Powers Act (RIPA) "to examine the belongings, emails, internet search records and phone calls of their own solicitor, Osita Mba, and the phone records of his then wife" to find if he had spoken to the editor of The Guardian, David Leigh.^[43]

MPs in the House of Commons public accounts committee praised Osita Mba and called for scrutiny into HMRC's use of RIPA powers in a report. The report said: "We are deeply disappointed by HMRC's handling of whistleblowers. We consider that HMRC's use of powers reserved for tackling serious criminals against Mr Osita Mba was indefensible. HMRC told us that it had changed how it deals with whistleblowers and that it now provides information to its audit and risk committee who can use this to challenge how HMRC handles whistleblowers."^[44]

Call waiting times

In September 2015, a report from Citizens Advice highlighted frustration amongst callers to HMRC over long holding times. The report claimed that "thousands" of callers were waiting on average 47 minutes to have their call answered, often at considerable expense to the caller.^[45] HMRC alleged that the "unscientific and out-of-date survey of tweets" did "not represent the real picture" but said that 3000 extra staff had been taken on to respond to calls. A June 2015 report from the National Audit Office indicated that the total number of calls answered by HMRC fell from 79% in 2013–14, to 72.5% in 2014–15, however a subsequent report in May 2016 suggested that performance improved following the recruitment drive.^[46]

See also

• HM Revenue and Customs Museum


• Government Offices Great George Street

References

External links

Wikimedia Commons has media related to H.M. Revenue & Customs.

• Official website


• Commissioners for Revenue and Customs Act 2005


• 
  Treasury Press Release (25 November 2004)


• 
  HMRC criticised for using terror laws against tax whistleblower The Guardian, 2014


• 
  Government must revisit the 2019 Loan Charge to avoid bankrupting thousands of innocent contractors Politics Home, 2018


• 
  Mental health problems can be 'exacerbated' by HMRC demands, experts say The Telegraph, 2018


• 
  MP targets 'immoral' HMRC over 'retrospective' taxation of contractors The Telegraph, 2018


• 
  Please only be suicidal during office hours, say HMRC, to workers facing bankruptcy Business Matters, 2018