Revenue merger faces delay

The merger of the Inland Revenue and the Contributions Agency is in danger of being delayed for a year, officials warned last week, reports Phillip Inman.

The setback, which comes despite trade and industry secretary Ian McCartney?s pledge that the merged department will be responsible for the minimum wage from next April, will prove an embarrassment to chancellor Gordon Brown, who said in his last Budget that the merger would streamline the tax service and cut red tape. The merger was due to be in place by April, but is now unlikely to be completed until 2000.

The agency said the bill needed to underpin the merger was being squeezed out of the government?s congested programme. If it appears in the Queen?s speech, it is still likely a major slice of the legislation will be pushed into the following year?s programme, the agency said.

Alistair Kendrick, a senior tax manager at KPMG, was disappointed the government had failed to allow time for the bill. ?The merger won?t be finalised until the next century,? he said.

Jim Yuill, director of social security services at Ernst & Young, said: ?It seems they have underestimated the amount of work they need to do. So employers who are confused by the current arrangements will carry on being confused.?

They were responding to comments made by agency officials at a conference last week in Newcastle.

They said they still hoped Revenue staff would be given powers to run the national insurance system, and that legislation would clear the way for ?information flows across revised departmental boundaries? ? allowing the Benefits Agency to carry on receiving national insurance data.

But it was unlikely there would be time to transfer the responsibility for the national insurance fund to the Treasury and the accountability for the fund to the Revenue.

Officials also signalled that a merger of the departments could take longer than estimated, as most internal arrangements were incompatible, including salary scales, benefit packages, and computer systems.

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