Taxation – the means by which a civilised society performs the sometimes uncivil task of taking money from one group in order to give it to another – has been a part of life for a very long time.
The ancient Greeks complained about it. Jesus was born in a stable in Bethlehem because of the need for Mary and Joseph to register for it. And Lady Godiva rode naked through the streets of Coventry in the 11th century to persuade her husband to reduce it.
Over the years taxes have been applied to just about everything, from land (witness William the Conqueror’s Domesday book), to dice and newspapers in the Colonies (one of the factors that led to American independence in 1783), and to dogs (where the assessor would go round at night, kick on each door, and assess the number barking).
A tax on income was long resisted, however. It required a gentleman or single lady to tell someone else their income and that was, Prime Minister William Pitt argued in 1798, ‘repugnant to the customs and manners of the nation’.
But the need to feed his troops persuaded Pitt to change his mind and income tax – still technically a temporary measure – is part of our life today. It is one of the ways in which Government -representing the people – pays for the services that the people demand, like security, education, a health service and support for the less well-off.
Nobody enjoys paying income tax, but few people argue that we would be better off without it.
This brief history then, and the exhibition associated with it, is designed to mark the 200th anniversary of income tax, not to praise it.
I hope you find it stimulating because the history of income tax is, in a very real sense, your history– Nick Montagu, Chairman of the Board of Inland Revenue, U.K.
Income Tax was announced in 1798, and introduced in 1799, as a means of paying for the war against the French forces under Napoleon. France was threatening to invade, and had already landed briefly in Wales and Ireland. For much of his campaigns from 1795, Napoleon was better organised than the British forces. The cost of war had drained Britain’s resources, and run up a considerable national debt. The army was starving, and poor conditions in the navy in 1797 had led to mutiny.
William Pitt the Younger was Prime Minister and Chancellor of the Exchequer from 1783, and needed greater ‘aid and contribution for the prosecution of the war’.
‘Certain duties upon income’ as outlined in the Act of 1799 were to be the (temporary) solution. It was a tax to beat Napoleon. Income tax was to be applied in Great Britain (but not Ireland) at a rate of 10% on the total income of the taxpayer from all sources above £60, with reductions on income up to £200.
It was to be paid in six equal instalments from June 1799, with an expected return of £10 million in its first year. It actually realised less than £6 million, but the money was vital and a precedent had been set.
In 1802 Pitt resigned as Prime Minister over the question of the emancipation of Irish catholics, and was replaced by Henry Addington. A short-lived peace treaty with Napoleon allowed Addington to repeal income tax. However, renewed fighting led to Addington’s 1803 Act which set the pattern for income tax today.
Addington’s Act for a ‘contribution of the profits arising from property, professions, trades and offices’ (the words ‘income tax’ were deliberately avoided) introduced two significant changes:
- Taxation at source – the Bank of England deducting income tax when paying interest to holders of gilts, for example
- The division of income taxes into five ‘Schedules’ – A (income from land and buildings), B (farming profits), C (public annuities), D (self-employment and other items not covered by A, B, C or E) and E (salaries, annuities and pensions).
Although Addington’s rate of tax was half that of Pitt’s, the changes ensured that revenue to the Exchequer rose by half and the number of taxpayers doubled. In 1806 the rate returned to the original 10%.
Pitt in opposition had argued against Addington’s innovations: he adopted them almost unchanged, however, on his return to office in 1805. Income tax changed little under various Chancellors, contributing to the war effort up to the Battle of Waterloo in 1815.
Nicholas Vansittart was Chancellor when Napoleon was defeated. His inclination was to maintain some tax on income, but public sentiment and the opposition were against him. A year after Waterloo, income tax was repealed ‘with a thundering peal of applause’ and Parliament decided that all documents connected with it should be collected, cut into pieces and pulped.
The critics of income tax had won the day, but experience had proved that it was a practical means of raising revenue, that it could be applied fairly, and that concerns about invasion of privacy were largely misplaced. The critics were also frustrated in the destruction of the records, unaware that duplicates had already been sent to the King’s Remembrancer.
The mid-1800s saw the beginnings of significant social and economic change. With the Whigs (forerunners of the Liberals) in power from 1830, child labour was limited, slavery in the Empire ended, and Parliamentary reform gave representation to cities including Manchester and Liverpool, and to more of the middle classes. Railways transformed communications within England and linked Scotland, Wales and – via Holyhead – Ireland. The potato famine in Ireland began in the mid-1840s.
The general election of 1841 was won by the Conservatives with Sir Robert Peel as Prime Minister. Although he had opposed income tax, an empty Exchequer and a growing deficit gave rise to the surprise return of the tax in his 1842 Budget. Peel sought only to tax those with incomes above £150, and he reduced customs duties on 750 articles out of a total number taxed of 1,200. The less wealthy benefited, and trade revived as a consequence.
Peel’s income tax was imposed for three years, with the possibility of a two year extension. A funding crisis in the railways and increasing national expenditure ensured that it was maintained. For Peel, the debate was academic. In 1846 he repealed the Corn Laws – which supported farmers by inflating the price of corn when cheaper imports were available – and lost the support of much of his party. The Whigs resumed power the same year to be joined by some notable ‘Peelites’.
A ‘temporary’ tax
Income tax is still a ‘temporary’ tax – it expires each year on 5 April and Parliament has to reapply it by an annual Finance Act. For up to four months until the Finance Act becomes law, the Provisional Collection of Taxes Act 1913 ensures that taxes can still be demanded.
From the introduction of income tax, Government-appointed Commissioners – usually the landed gentry – were responsible for administering and collecting taxes with Surveyors having a watching brief. This pattern is essentially the same today. Surveyors have since been renamed Inspectors, however, and now have total responsibility for assessment and collection whereas Commissioners resolve disputes but have no executive duties.
In 1833 the Board of Taxes and the Board of Stamps (controlling duties paid on documents on which house transactions, for example, are recorded) were combined in the Board of Stamps and Taxes, and in 1849 the Board of Excise was added to create the new Board of Inland Revenue.The Excise Department moved from the Inland Revenue to the Board of Customs in 1909.
The second half of the 19th century was dominated by two politicians – Benjamin Disraeli and William Ewart Gladstone.
A Conservative, Disraeli opposed Peel’s repeal of the Corn Laws which had inflated the price of imported grain to support home farmers. He was three times Chancellor of the Exchequer and twice Prime Minister.
Formerly a Conservative, Gladstone supported the repeal of the Corn Laws and moved to the opposition (Whigs, and from 1868 Liberals). He was four times Chancellor and four times Prime Minister – his final term starting at age 82.
Disraeli and Gladstone agreed about little, although both promised to repeal income tax at the 1874 General Election. Disraeli won – the tax stayed (and probably would have done under Gladstone too).
|Some views of Disraeli|
‘Never had I so kind and devoted a Minister and very few such devoted friends’ – Queen Victoria ‘A cursed old Jew, not worth his weight in cold bacon’ – Thomas Carlyle, historian ‘And the potent wizard himself, with his olive complexion and coalblack eyes, and the mighty dome of his forehead, is unlike any living creature one has met… Yet the ultimate impression is of absolute sincerity and unreserve. Grant Duff will have it that he is an alien’ – Sir John Skelton
|Some views of Gladstone|
‘A sophisticated rhetorician, inebriated with the exuberance of his own verbosity’ – Disraeli ‘That half mad firebrand who would soon ruin everything and be a dictator’ – Queen Victoria ‘For the purposes of recreation he has selected the felling of trees; and we may usefully remark that his amusements, like his politics, are essentially destructive. Every afternoon the whole world is invited to assist at the crashing fall of some beech or elm or oak. The forest laments in order that Mr Gladstone may perspire’ -Lord Randolph Churchill, Conservative politician and later Chancellor
Income tax – going but not gone
Gladstone spoke for nearly five hours introducing his 1853 Budget. He outlined plans for phasing out income tax over seven years (which the Crimean War was to upset), of extending the tax to Ireland, and introduced tax deductions for expenses ‘wholly, exclusively and necessarily’ incurred in the performance of an office – including keeping and maintaining a horse for work purposes. The 1853 Budget speech included a review of the history of the tax and its place in society, it is regarded as one of the most memorable ever made.
With the Whigs defeated in 1858, Disraeli returned as Chancellor and in his Budget speech described income tax as ‘unjust, unequal and inquisitorial’ and ‘to continue for a limited time on the distinct understanding that it should ultimately be repealed’. But the Conservatives return to power was short-lived. From 1859 to 1866, the Whigs were back with Viscount Palmerston as Prime Minister and Gladstone as Chancellor.
Gladstone had set 1860 as the year for the repeal of income tax, and his Budget that year was eagerly awaited. Ill health caused it to be delayed and for his speech to be shortened to four hours. But he had to tell the House that he had no choice but to renew the tax. The hard fact was that it raised £10 million a year, and Government expenditure had increased by £14 million since 1853 to £70 million (these figures should be multiplied by 50 for a modern equivalent).
Gladstone was still determined that income tax should be ended. When a Select Committee was set up against his wishes to consider reforms which might preserve it, he packed the committee with supporters to ensure that no improvements could be made. In 1866, the Whigs’ modest attempts at Parliamentary reform failed to win support in Parliament and the Conservatives returned to power, although with no overall majority. Disraeli succeeded where Gladstone had failed, seeing the Reform Bill of 1867 become law. This gave the vote to all householders and to those paying more than £10 in rent in towns – and so enfranchising many of the working class for the first time. Similar provisions for those living in the country came with Gladstone in 1884.
While Disraeli had gambled that an increased electorate would ensure a Conservative majority, and in 1868 he was Prime Minister, the election of that year saw the Liberals – as the Whigs had become – victorious under Gladstone. Income tax was maintained throughout his first Government, and there were some significant changes made including the right to appeal to the High Court if a taxpayer or the Inland Revenue thought the decision of the appeal Commissioners was wrong in law. But there was still a determination to end it. The Times, in its 1874 election coverage, said ‘It is now evident that whoever is Chancellor when the Budget is produced, the income tax will be abolished’.
Disraeli won the election, Northcote was his Chancellor and the tax remained. At the time it was contributing about £6 million of the Government’s £77 million revenue, while Customs and Excise contributed £47 million. It could have been ended, but at the rate at which it was applied (less than 1%) and with most of the population exempt, it was not a priority. With worsening trade conditions, including the decline of agriculture as a result of poor harvests and North American imports, the opportunity never arose again.
Even before the First World War, there was massive social change in Britain. By 1901, 80% of the population lived in towns – a rise from 50% in 1851 and a far higher proportion than in any other country. Real wages in the 50 years to 1914 doubled, allowing almost everyone in work the opportunity for recreation. Football clubs were established in virtually every industrial town in the last quarter of the 19th century, and drew huge crowds. Emmeline and Christabel Pankhurst led the suffragettes, campaigning for votes for women by withholding taxes and staging public demonstrations
Although the Unionists – a coalition of Conservatives and Liberals opposed to plans for home rule for Ireland – were in power at the turn of the century, the 1905 election saw a Liberal/Labour pact return the Liberals with a huge majority – and supported by 29 ‘Labour’ MPs (although the Labour Party was not formally established until 1906). With the new Government came a change in the way taxation was viewed – from a means of (largely) paying for wars to a way of supporting the welfare of the people
In 1907, Chancellor Herbert Asquith introduced the long-debated concept of ‘differentiation’ -taxing less on earnings than on investments. With Asquith’s elevation to Prime Minister in 1908, Lloyd George as Chancellor introduced non-contributory old-age pensions, and – in the ‘People’s Budget’ of 1909 – plans for a super-tax for the rich. The rejection of this Bill by the House of Lords led to the 1911 Parliament Act which removed the Lords’ power of veto.
Paying for the Great War
World War I was horrific – ten million dead and twenty-one million wounded, of whom about one-tenth were British. However, it accelerated change at home with better medical facilities, better provision for the young and old, and reward for the women’s movement which had stopped campaigning to join the war effort. In 1918, all adult men and women over 30 were given the vote: ten years later all adult women could vote.
At the start of the war the standard rate of income tax was 6%, which produced an income to the Exchequer of £44 million with a further £3 million in super-tax. By 1918, the standard rate had risen to 30% realising £257 million with £36 million more in super-tax. Increases in personal allowances eased the burden in part for taxpayers.
In addition to these taxes, an Excess Profits Duty was introduced to raise revenue and to remove the excessive profits that firms had made from the war effort. With this and other tax changes, the total collected rose to over £580 million – seventeen times the 1905 figure when income tax was still the legacy of Pitt, Addington, Peel and Gladstone.
Lloyd George’s coalition Government won the 1918 general election overwhelmingly – 526 seats against 56 for Labour and 26 Independents – and the Government set about building a ‘land fit for heroes’, with health and education extended, pensions raised and 200,000 houses built in the period 1919 to 1922.
Such growth could not be sustained. The national debt in 1914 was £706 million: six years later it had grown to £7,875 million. Labour unrest grew in a depressed economy, and tough measures were used against strikers including miners, railwaymen and the police.
In Ireland, Sinn Fein had won 73 seats out of 81 in the south and withdrew from Westminster to set up an unofficial Parliament – the Dáil – in Dublin. In 1921 Lloyd George accepted the loss of Ireland, and the Irish Free State came into being the following January.
Lloyd George’s coalition crumbled in the face of attacks by Stanley Baldwin and the Conservatives, and Ramsay MacDonald and Labour. Baldwin won the elections in 1923 and 1924 and – although labour relations had eased since the strikes of 1919 to 1921 – his Government’s decision effectively to reduce miners’ wages led to the General Strike of 1926. From 3 to 12 May, two million men and women stopped work in a peaceful demonstration of solidarity.
Attempts to make tax easier
With income tax now accepted as a necessary part of life, attempts were made to clarify it.
- The Income Tax Act of 1918 consolidated all income tax legislation into one volume, one of the Law Lords commenting of previous legislation ‘no censure could be too strong, I think, for having expressed an Act… in language so involved, so slovenly and so unintelligible as is the language of the Acts of 1842 and 1853’. The language stayed in the consolidated version, however, having proved impossible to change.
- A Royal Commission was set up in 1920 ‘to enquire into the income tax (including super-tax)’ in all its aspects. After 50 sittings and the examination of 200 witnesses, the 100,000 word report proposed changes in detail, but concluded that ‘as it was in 1842, so in its essential features should it remain’. Although the value of Peel’s 1842 legislation was noted, the real credit is to Addington’s Act of 1803.
- In 1927 Chancellor Winston Churchill set up the Income Tax Codification Committee to condense the 800 provisions of 19 different Acts, and the decisions of 1,800 court cases, into a single code. It reported in 1936, but – with the Second World War intervening – was not considered in detail until 1952. By then a further fifteen Finance Acts had been passed, and there were a further six volumes of reported cases to consider. Despite some revolutionary proposals, the attempt had failed.
Learning from the lessons in 1914, the outbreak of the Second World War saw immediate action to raise extra revenue for the war effort. ‘Finance is the fourth arm of defence’, said Chancellor Sir John Simon in the first war Budget.
In 1939, the standard rate of income tax was 29% with surtax at 41% for incomes over £50,000. Ten million people were liable for tax, and the total sum raised was £400 million.
Successive increases in rates and lowering of allowances led to 1944-45 figures of 50%, surtax at 48% for incomes over £20,000, fourteen million taxpayers and nearly £1,400 million raised.
An Excess Profits Tax introduced for business raised further revenue (£508 million in 1944-45). It compared war-time profits with pre-war or ‘standard’ profits, taxing the difference initially at 60% and then at 100%. It was repealed in 1946.
The burden of taxation during the war was high, although it was accepted as a necessary price to pay to defeat Nazi Germany.
In a unique arrangement, the additional tax paid as a result of the lowering of personal allowances was recorded and credited to the taxpayer. It was repaid – to those who had kept their post-war credit certificates – by 1973.
Businesses benefited in a similar way with a 20% refund of Excess Profits Tax paid at 100%. These payments, aimed to boost reconstruction, were paid soon after the end of the war.
Pay As You Earn
The growing number of taxpayers during the war led to the need for a more efficient tax collection system, and Pay As You Earn – PAYE – was introduced in 1944 as a result.
In place of annual or twice-yearly collections, tax was deducted by employers from wages weekly or monthly and an employee leaving work was given a P45 recording his or her code number, pay to date and tax paid to date to pass on to a new employer.
The British scheme had been piloted by Churchill’s Chancellor Sir Kingsley Wood from 1940-41. On the day it was to be announced, Wood collapsed and died. But by the end of January 1944, fifteen million people – anyone earning £100 a year or more – had received notices telling them their code number. In the Inland Revenue’s first exercise in public relations, staff visited work places to discuss the system with employers and employees.
The fifty plus years since World War II have seen greater social and economic changes than any other comparable period. The National Health Service was introduced in 1948, and the phrases ‘Welfare State’ and ‘cradle to grave’ began to be used to reflect a wide range of social provisions including broader national insurance provisions, the introduction of child allowances, the raising of the school-leaving age and increased old age pensions. Many of these provisions were based on the Beveridge Report of 1942.
Reflecting society, income tax provisions have changed too.
To avoid double taxation arising in one country to residents of another, special arrangements have been in place within the British Empire from 1916. The first agreement with a non-Empire country was with the United States in 1945. Britain now has more agreements with other countries than any other nation.
Corporation Tax on company profits and Capital Gains Tax on long-term gains were introduced by Chancellor James Callaghan in 1965. Callaghan – later Prime Minister and now Lord Callaghan – had previously been an Inland Revenue employee and trade unionist.
Value Added Tax – replacing purchase tax – was introduced in 1973 to be collected by Customs and Excise. William Pitt may have applauded it over income tax because the individual can regulate how much is paid. He or she can simply not buy that item or so many of them – and food, children’s clothes and books and newspapers are zero-rated.
Surtax – introduced as super-tax by Lloyd George in 1909 and attacked in Beatle George Harrison’s ‘Taxman’ (Let me tell you how it will be, there’s one for you nineteen for me. ’Cause I’m the taxman) – was removed in 1973, but replaced by higher rates of income tax for those with high incomes.
Since 1990, a married woman has been taxed independently on her own income with her own personal allowance. The fight for equality in tax had begun with the Married Women’s Property Act of 1882.
In 1992, Her Majesty the Queen elected to pay tax on her income, a move designed to bring the monarchy closer to the people. Queen Victoria had also paid income tax for a time after its reintroduction in 1842.
|Special rates have been introduced twice within the post-war years, causing income tax in certain circumstances to exceed 100%. For 1947-48 a special contribution was payable when a person’s total income exceeded £2,000. For investment income over £5,000 it was 50%. So with income tax at 45% and surtax at 52.5%, the effective rate was 147.5%. In 1967-68, the special charge was imposed. For investment income over £8,000, the rate was 45% which – with income tax at 41.25% and surtax at 50% – meant a total rate of 136.25%.|
Whilst the computer revolution has affected the assessment and collection of all taxes since the war, Self Assessment – which was introduced for the tax year 1996-97 – has seen a radically new approach to both assessment and the means of communicating it.
Self Assessment is for people with more complex tax affairs – including the self-employed, business partners, company directors and those paying tax at higher rates. It is not a new tax, just a simplified method for people who may have had several tax forms to fill in previously and who may have been paying tax on different types of incomes at different times – even in different years. It gives them the option of calculating their own tax payments, if they wish. Nine million people are affected.
Getting the message across
Having simplified the system, Inland Revenue’s task was to communicate various messages to those affected, those not affected, and to Inland Revenue staff and tax advice groups.
A three-year publicity strategy costing £25 million has seen awareness-raising activities including:
- Television commercials featuring cartoon character Hector with Sir Alec Guinness’s voice-over – his first advertisement
- Radio commercials
- Newspaper and magazine advertisements
- Leaflets and information packs
- Other media including Rani the elephant, beer mats, petrol pump stickers, special ‘fronts’ painted on the backs of buses, and an Internet site.
The campaign has been monitored through ten ‘waves’ to date. More than 80% of the target audience now know something about Self Assessment and, in the first year for which Self Assessment returns have been sought, eight million taxpayers sent in their returns by the deadline, 31 January 1998, including 95% of those who do not employ a tax adviser.
By any standards, income tax today is big business.
As a publisher, the Inland Revenue produces 12.5 million leaflets a year, with 160 titles currently in print.
As a direct mail organisation, nine million mailings to those affected by Self Assessment was big -but not exceptional. Those mailings were all to named individuals, and all contained only relevant information – guidance for pensioners, the self-employed or company directors, for example.
The telephone – invented in 1875 – made relatively little impact for income tax purposes for the next 100 years. But its importance as a tool of customer service has grown enormously in recent years. Of eight million people issued with Self Assessment tax returns in April 1997, for example, half-a-million had telephoned for help within six months.
In computers, the first on-line system for assessing tax went live nationally in 1984. At the time, it was the largest on-line system in Europe, with a network growing to over 50,000 terminals. More recently, a system to support Self Assessment was introduced with virtually no IT problems and very little down time. It affects nine million taxpayers and a large proportion of the Inland Revenue’s staff.
… and a big employer
Today, over 50,000 people are employed directly by the Board of Inland Revenue, but many times that number work in various areas of taxation around the country. They include tax advisers, accountants, lawyers and their support staffs, and they are represented by various professional bodies who work with the Inland Revenue to clarify and simplify tax matters. The main professional bodies, and the two Inland Revenue trade unions, are:
The Chartered Institute of Taxation is the senior professional body in the United Kingdom concerned solely with all aspects of taxation. It has a broadly-based membership across the professions and across occupations in industry, commerce, the public sector and the taxation authorities. Members have the practising title of ‘Chartered Tax Adviser’.
The Association of Taxation Technicians was established in 1989 to provide a taxation qualification for those concerned with tax compliance employed in industry, commerce and the public sector, as well as those employed in professional practices. It is a companion body of the Chartered Institute of Taxation.
The Institute of Chartered Accountants of Scotland is the oldest professional body of accountants in the world. Members advise clients on taxation matters or are involved with taxation within their own businesses.
The Institute of Chartered Accountants in England and Wales is the largest professional accountancy body in Europe with a membership of 113,000. About half the active members are employed in private practice, and half in industry, finance and commerce. The institute established a Faculty of Taxation in 1991.Members of
The Chartered Institute of Management Accountants are concerned with the preparation of management accounts, including the financial planning of business strategy, the options available and the relevant taxation implications.
Public and Commercial Services is the union representing most members of the Inland Revenue. Formed from the Inland Revenue Staff Federation (IRSF), it is regarded as one of the most dynamic of Civil Service unions. Douglas Houghton, the first General Secretary, was ‘the most outstanding white collar trade union leader of his day’ – according to James (now Lord) Callaghan, his Assistant Secretary for three years and later Prime Minister.
Union of Senior Revenue Officials represents 2,500 senior managers, including Board members – around 90% of those eligible to join. Active throughout the century as both an independent trade union and a professional association, in recent years it also became a section of the First Division Association (FDA) which represents the most senior grades across the Civil Service.
The business of income tax – like every other business – is set to change dramatically over the coming years. This will be driven by the changing patterns of work affecting all of us and by the need for greater effectiveness. It will be supported by developments in new technology.
A changing society
The PAYE system, for example, was designed for the world of work of the 1940s, when most people finished their formal education in adolescence and often stayed with one employer for the next forty years. On retirement they would draw a state pension that was below the tax thresholds.
The world today is very different:
- People are changing jobs increasingly frequently
- People may have more than one job at any time
- More people are self-employed
- There is more part-time and casual work
- There are many more companies, especially smaller companies
- There are more pensioners, many with investments supplementing occupational and state pensions and many in work.
Dealing with a very different ‘market’ is only part of the challenge, for customers expect a much higher level of service than previously. Recognising this, the Government wants public services to match the best standards in the private sector, with many being available 24 hours a day, seven days a week, 52 weeks a year. The expectation is that Government services will increasingly be designed to suit the needs of the citizen rather than the convenience of administrators.
The impact of technology
Electronic systems will increasingly be used to improve and complement the business of assessing and collecting taxes. The Prime Minister has set a target that – within five years – a quarter of all transactions with Government should be capable of being carried out electronically, through computers, telephone and televisions.
One of the Inland Revenue’s visions is a world where taxpayers are supported by Customer Service Centres where they can get immediate answers to most tax – and other – problems by telephone, e-mail or Internet. The Centres would support local outlets focused on customer service, perhaps grouped with other central and local government agencies. Inland Revenue processes will be designed to suit the customer, rather than the Inland Revenue trying to fit customers to its requirements.
The vision of this adaptable, customer-focused organisation will also include Compliance Centres – centralising expertise in difficult areas of tax and being proactive in supporting customers. These Centres would recognise that much non-compliance stems from difficulty with the law and procedures, rather than from wilful evasion.
‘Intelligent’ forms – prompting for entries, checking the sums and taking users through the boxes -will be available on the Internet and intranet.
A wider role for the Inland Revenue
Early next century, two hundred years of tax legislation will have been largely rewritten to make it clearer and simpler. The Inland Revenue will be more automated and more efficient.
As well as dealing with income tax and other direct taxes, it will also administer Working Families Tax Credits, monitor the national minimum wage, collect student loans and work more closely with Customs and Excise. It will have begun to align the rules and procedures for tax and national insurance contributions following the transfer of the Contributions Agency from the Department of Social Security. It is likely to play a part in the Government’s ‘work-focused gateway’ into the benefits system, transforming Inland Revenue’s job from just gathering direct taxes and contributions (and stamp duty) to having a role in a wider policy of social inclusion.
|It’s a Sunday afternoon in 2005. Anne Jones is on a high-speed train journey but she’s bored. She’s read the newspapers, and surfed the net from her third-generation mobile phone. So why not do something useful? She calls up her home computer and downloads her accounts into the phone’s memory, and then downloads her tax return from the Inland Revenue. Most of the details are filled in automatically – she just has to agree with each entry when prompted. But there is a query about payments on her student loan that she needs help with. She could e-mail her query or use the phone to contact a Call Centre. But she decides to use the phone’s camera to video conference with Inland Revenue staff. Robert in the Call Centre is pleased to help. He automatically got her record on screen when she clicked on the ‘Call Me’ icon on the Government’s Web pages, and he guides her through the problem. The form is soon completed in the background as Robert talks her through some questions and answers, and she signs to confirm by swiping her multi-purpose smart card through the reader. As it happens, Anne was due a repayment. Later in her journey she sees there is an incoming message notifying her of the amount, and confirming that it has been paid into her bank|