The newly published Annual Report and Accounts of the Inland Revenue for the year ending 31 March 2004 makes many references to the coming merger between the Inland Revenue and Customs and Excise.

In July 2003 the Chancellor of the Exchequer announced a major review of the Departments dealing with tax policy and administration: HM Customs and Excise, the Inland Revenue, and HM Treasury. The review's remit was to examine the best organisational arrangements for achieving the Government's tax objectives. It was led by Gus O'Donnell, Permanent Secretary HM Treasury.

The report examined the work of the Revenue Departments and challenges in improving tax administration, better use of information and tax policy making. The report recommended the creation of a new Department, integrating HM Customs and Excise and the Inland Revenue, new policy making arrangements between the new Department and HM Treasury and a new accountability framework.

The Chancellor in his March 2004 Budget announced that the Inland Revenue will merge with HM Customs and Excise to form a new Department, HM Revenue and Customs (HMRC). The new Executive Chairman designate, David Varney, and Deputy Chairman designate, Paul Gray, took up their appointments (initially as Chairman and Deputy Chairman of the two existing Departments) on 1 September 2004.

Planning to merge appropriate functions is underway in advance of a new Act of Parliament that will give the new Department legal status which, subject to Parliamentary time, is expected to be passed in 2005.

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Source:
www.inlandrevenue.gov.uk/pdfs/report2004.pdf