MPs back Customs merger.

The Commons Treasury Committee has backed a merger of the Inland Revenue with Customs & Excise. Following a three-month inquiry into the workings of Customs, the committee said a merger of the two departments must be carefully planned to minimise the impact on taxpayers and departments’ work programmes. MPs claimed a ‘window of opportunity’ for merger would exist after the Revenue had integrated the Contributions Agency and called for the boards of Customs and the Revenue to be merged as a first step. The report said: ‘We believe that the merger of the Revenue and Customs would improve compliance with taxation, reduce businesses’ compliance costs and reduce the government’s revenue collection costs and we recommend that such a merger should proceed and that the government should bring forward a plan for the merger in accordance with our conclusions and recommendations.’ In evidence Dame Valerie Strachan, in one of her last tasks as Customs’ chief, claimed merger would take up senior management time and detract from other vital work, and even Mike Fountain, chief executive partner, UK Indirect Taxes, of PricewaterhouseCoopers, said business did not want the disruption a full-blown merger would cause. Their proposal follows a visit to Canada where the two tax-gathering arms were merged in 1993. The committee – which took a strongly critical look at the way Customs has been run – also attacked avoidance schemes ‘devised by accountants which have no commercial justification except to dodge VAT obligations’. It said Customs had a duty to protect revenues and were ‘concerned’ that neither taxpayers nor Customs’ staff had a clear idea of what the department considered avoidance to be.

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