What is the HM Revenue and Customs (HMRC)?
The HM Revenue and Customs (HMRC) is a department of the United Kingdom responsible primarily for regulating taxes, wages, child benefits, and other elements of the financial sector. Her Majesty’s Revenue and Customs is the United Kingdom’s tax authority. The HMRC was established following the “merger” of the Board of Customs and Excise and the Inland Revenue in 2005. The department reports directly to the U.K. Parliament via the Treasury.
The HMRC is responsible for the collection and administration of taxes, including corporate tax, inheritance tax, income tax, capital gains tax (CGT), VAT (value-added tax), environmental taxes, excise duties, air passenger duties, climate change levies, stamp duty land taxes (SDLT), etc.
- The HM Revenue and Customs (HMRC) is a department of the United Kingdom (UK) responsible primarily for regulating taxes, wages, child benefits, and other elements of the financial sector.
- The HMRC was established following the “merger” of the Board of Customs and Excise and the Inland Revenue in 2005.
- The HMRC comprises four key subdivisions that are each individually managed and directed by a director-general. The subdivisions include the Personal Tax Division, the Corporate or Business Tax Division, the Benefits and Credits Payment and Administration Division, and the Reporting and Compliance Enforcement Division.
Functional Structure of the HMRC
The HMRC comprises four key subdivisions that are each individually managed and directed by a director-general. The subdivisions include the Personal Tax Division, the Corporate or Business Tax Division, the Benefits and Credits Payment and Administration Division, and the Reporting and Compliance Enforcement Division.
The HMRC’s tax-focused subdivisions all function with the primary objective to ensure that the taxation system is effectively executed and adhered to. The divisions are responsible for the collection of taxes and facilitating fund transfers to the Treasury.
The HMRC’s Benefits and Credits Division is focused on the management and payment facilitation of benefits and tax credits and other statutory payments – i.e., maternity pay.
The Reporting and Compliance Enforcement Division oversees various areas, such as minimum wage payment implementation, recovering unpaid funds – i.e., student loans – setting penalties and punishment for unpaid taxes, investigating tax evasion cases and/or fraud, etc.
The HMRC also oversees a Customs Division that enforces international trade custom regulations and payments and enables legitimate international trade. The division is also responsible for the collection of trade data for the United Kingdom. Furthermore, the HMRC also oversees the Government Banking Service.
HMRC’s Governance Structure
The HMRC is overseen by a Board. The Board consists of Ex-Co members (Executive Committee) and non-executive directors. It is responsible for establishing the HMRC’s strategies and advising the management team – primarily the Chief Executive – on key appointments and issues. The Board also serves as an advising body recording best practices and assurance and reserves the authority to approve or reject business plans.
The HMRC and Anti-Money Laundering
The HMRC is very active in its anti-money laundering efforts. The non-ministerial department established strict legislation to aid in the fight against financial crime. The body also established regulations and guidelines that explicitly target money laundering. The regulations and guidelines are compulsory for several financial institutions.
Moreover, the HMRC also imposed various requirements on financial institutions, intending to combat money laundering. The requirements include a “know-your-customer” component, which requires that financial institutions perform background checks on their clients and verify their identities, transaction detail tracking and record-keeping, and the employment of a dedicated official or financial crimes specialist to ensure compliance with financial crime regulations.
The HMRC also enforces the vitality and legal requirement that financial institutions report any suspicious transactions. In addition to the requirements, it also requires financial institutions to gather information and details about their partnering entities and other related parties. The department also mandates that financial institutions carry out a risk analysis to identify and determine financial crime-related risks and establish appropriate risk prevention and/or mitigation factors.
Furthermore, it is a requirement by the HMRC that financial institutions keep and maintain detailed records of clients and transactions. The department also created a position known as a “money laundering reporting officer” to serve the anti-financial objectives. It is required that every financial institution appoint a money laundering reporting officer.
CFI offers the Commercial Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful: