HM Revenue & Customs: Tax Authority of the United Kingdom

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Updated June 22, 2023
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What Is His Majesty's Revenue and Customs (HMRC)?

HM Revenue & Customs (HMRC) is the tax authority of the U.K. government. The agency is responsible for collecting taxes, paying child benefits, regulating tax and customs laws, and enforcing the payment of minimum wage by employers.

HMRC was formed in 2005 following the merger of the Inland Revenue and the Board of Customs and Excise, the agencies which formerly handled internal taxes and customs collection.

Key Takeaways

  • HMRC is the national taxing authority of the U.K.
  • HMRC administers certain benefits and tax credit payments to U.K. residents.
  • In 2005, HMRC was formed with the merger of Inland Revenue and the Board of Customs and Excise.

Role of the HMRC

HMRC collects all direct and indirect taxes in the U.K., including income tax, corporation tax, capital gains tax, inheritance tax, value-added tax (VAT), excise duties, stamp duty land tax, air passenger duty, and the climate change levy.

The HMRC is the British equivalent of the Internal Revenue Service (IRS) in the United States.

The HMRC oversees the efficient collection of taxes and the transfer of funds to the Treasury so that revenue for public services is available. The HMRC also educates and informs the public about their tax-paying duties.

HMRC Divisions

  • Government Banking Service: Provides reports to the HM Treasury to ensure an accurate cash management system.
  • Benefits and Credits: Administers the payment of tax credits, child benefits, statutory sick pay, and maternity pay.
  • Enforcement and Compliance: Takes action for non-payment of taxes, recovers unpaid student loans, implements systems to reduce tax avoidance (such as DOTAS), and enforces the minimum wage.
  • Customs: Focuses on the enforcement of customs payments and regulations for international trade to collect revenue and suppress smuggling and illicit trade in tobacco, alcohol, petroleum, and other goods.

History of HMRC

Established in 2005 under the Commissioners for Revenue and Customs Act, the HMRC is a non-ministerial department. The agency reports directly to Parliament through the Treasury, under the leadership of the Chancellor of the Exchequer. The HMRC represents the merger of Customs and Excise and the Inland Revenue, combining direct and indirect revenue departments.

The merger was previously overturned in 1862. In 1909, the excise duties were removed from the administration of the Inland Revenue and were combined with the Board of Customs to form the Board of Customs and Excise. Once again, a 1999 report by the Treasury Committee suggested a merger, citing the potential savings in public expenditure and compliance costs.

The decision, announced in March 2004, to merge the Inland Revenue and the Board of Customs and Excise was met with some skepticism as the two departments had such different historical and cultural foundations and legal structures.

Who Oversees the HMRC?

HMRC is a non-ministerial department, and the agency reports directly to Parliament through the Treasury under the leadership of the Chancellor of the Exchequer. The Treasury, in turn, supervises spending by HMRC.

When Was the HMRC Established?

The HMRC was established by an act of Parliament in 2005.

Where is the Headquarters of the HMRC?

The HMRC is headquartered in Westminster, London.

The Bottom Line

In 2005, the HMRC was formed with the merger of Inland Revenue and the Board of Customs and Excise. His Majesty's Revenue & Customs (HMRC) is the national taxing authority of the United Kingdom that collects all direct and indirect taxes and administers benefits and tax credit payments to residents.

Article Sources
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  1. HM Revenue & Customs. "Services and Information."

  2. U.K. Public General Acts. "Commissioners for Revenue and Customs Act 2005."

  3. HM Revenue & Customs. "Charter."

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