Her Majesty's Revenue and Customs (HMRC) is the UK government's tax authority. The agency is in charge of collecting taxes, providing child benefits, enforcing tax and customs rules, and requiring companies to pay the minimum wage.
HMRC was founded in 2005 as a result of the merger of the Inland Revenue and the Board of Customs and Excise, the bodies that formerly handled domestic taxes and customs collection.
History of HM Revenue and Customs
Under the 2005 Revenue and Customs Commissioners Act, commissioners appointed by the Queen to take charge of the country's tax system established the HRMC in the UK as a non-departmental division. Therefore, the agency reports directly to Parliament through the Treasury, led by the Minister of Finance. Treasury, in turn, oversees expenditure by HMRC.
In 1862, a committee was appointed to discuss combining the duties of the Internal Revenue with those of Customs and Monopoly. In 1909, SCT was abolished by the Internal Revenue Administration and merged with the Customs Board to form the Customs and Monopoly Board.
The decision to merge the Internal Revenue and the Customs and Monopoly Board, announced in March 2004, was met with some skepticism as the two departments have different historical and cultural foundations and legal structures.
What are HM Revenue and Customs' Responsibilities and Priorities?
The term 'Policy Partnership' refers to a policy-making framework in which the Treasury leads on strategic tax policy and policy creation, while HMRC leads on policy maintenance and implementation.
HMRC is in charge of the following:
- To protect the flow of funds to the Exchequer via collection, compliance, and enforcement actions.
- To support public services in the United Kingdom
- To aid in the facilitation of lawful international commerce and to preserve the United Kingdom's fiscal, economic, social, and physical security (both before and at the border), as well as to gather UK trade statistics
- To manage Statutory Payments such as statutory sick pay and statutory maternity pay.
- To provide targeted financial assistance to individuals and families through the provision of tax credits
- To administer Child Benefit
- To keep up with the large amount of transactions, as practically every UK citizen or institution has direct dealings with HMRC
- HMRC aspires to run an efficient tax system in the most understandable and consumer-focused manner possible.
- They also intend to manage the Government Banking Service.
Priorities
HMRC's top three strategic goals are as follows:
- To collect unpaid taxes and to crack down on avoidance and evasion
- To transform all of their clients' taxes and payments
- To create and provide an organization that is professional, efficient, and engaged.
Key Takeaway
What is an HM Revenue & Customs self-assessment tax return?
HM Revenue and Customs (HMRC) employs Self Assessment to collect Income Tax. Wages, pensions, and savings are often taxed automatically. Other income (including COVID-19 grants and support payments) must be reported on a tax return by individuals and enterprises.
Anti-Money Laundering and the HMRC
The HMRC is quite assertive in its attempts to combat money laundering. To help in the battle against financial crime, the non-ministerial agency developed strict legislation. In addition, the organization produced regulations and guidelines that specifically target money laundering. Several financial institutions are required to follow the rules and regulations.
Moreover, in order to prevent money laundering, the HMRC established various requirements on financial institutions. The requirements include a " Know Your Customer " component that requires financial institutions to conduct background checks and verify their clients' identities, transaction detail tracking and record-keeping, and the hiring of a dedicated financial crimes specialist to ensure compliance with financial crime regulations.
The HMRC also ensures that financial institutions disclose any suspicious transactions, which is a fundamental and legal duty. In addition to the criteria, financial institutions are required to collect information and data about their collaborating businesses and other associated parties. The department also requires financial institutions to do a risk analysis in order to identify and assess financial crime-related risks and to implement suitable risk prevention and/or reduction measures.
Furthermore, the HMRC requires financial institutions to preserve extensive records of their clients and transactions. To further the department's anti-financial goals, a position known as a " Money Laundering Reporting Officer " was created. Every financial institution is obligated to employ a money laundering reporting officer.
Relationship Between FCA and HM Revenue & Customs
The Financial Conduct Authority (FCA) aims to ensure that markets in the UK operate competitively and fairly, benefit customers, staff, and shareholders, and maintain confidence in the UK as a major global monetary center. HM Revenue & Customs, on the other hand, should review the FCA to investigate money laundering crimes. Businesses that comply with the FCA UK Money Laundering Regulations must be supported by the authorities and registered with HMRC. In addition, there are various regulations that HM Revenue has enacted to combat financial crimes and these regulations. The anti-money laundering regulations established by HM Revenue and Customs apply to some institutions in the UK.
Organizations subject to legislation are regularly audited. Industries overseen by HMRC include bill payment service providers not regulated by the Financial Conduct Authority, Money service businesses not regulated by the Financial Conduct Authority, high-value dealers, corporate service providers not audited by the Financial Conduct Authority or a professional body, real estate agency, renting to agency companies, Digital, telecommunications, art market participants and IT payment service providers not regulated by the Financial Conduct Authority(FCA).
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