O’Donnell, commissioned by the chancellor, will present his findings to Gordon Brown in time for next month’s pre-Budget report.
A Revenue insider confirmed that a merger is the most likely outcome of the review, when he told Accountancy Age there is ‘no smoke without fire’.
Any merger would involve a huge administrative undertaking and is unlikely to be formally announced until the full Budget next year.
With Inland Revenue staff due to move into new Whitehall offices towards the end of 2004, and Revenue chief Sir Nick Montagu due to retire next year, early 2005 is a likely date for the first stages of any merger to begin.
Chas Roy-Chowdhury, head of tax at ACCA, met with O’Donnell last Tuesday this week and said he would ‘welcome the right kind of merger’. But he warned that it should not be used as an excuse to increase both departments’ ‘big brother’ attitude.
‘We went through the issues concerned with a possible merger,’ said Roy-Chowdhury.
‘But nothing has been decided. It is important that any merger offers synergy for both business and the government.’ He said any merger would not be a ‘big bang’, but would be done gradually.
A spokesman for the Revenue confirmed that O’Donnell’s findings would be presented in the pre-Budget report on 10 December.
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