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61-633: As of February 2020, SIPs are one of 4 employee share schemes in the UK , alongside Share Option Plans (CSOPs), Enterprise Management Incentives (EMI), and Savings Related Share Option Schemes (SAYE) . There are 4 main elements to the SIP from which companies can choose to use one or more of the following: Free Shares, Partnership Shares, Matching Shares, Dividend Shares. Companies can give up to £3,600 of Free Shares to employees in each tax year (from 6 April 2014). A participating employee can only take their Free Shares out of

122-430: A 3-year holding period. If the shares are removed after 3 years from the date of award there is no Income Tax or National Insurance liability. In certain circumstances, prescribed by HMRC , there can be no Income Tax or National Insurance liability when the employee leaves the company, no matter how long the shares have been held in the plan. For the employee SIPs provide the opportunity to invest pre-tax salary in

183-682: A collection rate of 95.3% (up from 92.7% in 2005-6). At the end of March 2009, HMRC was managing 20 million 'open' cases (where the department's systems identify discrepancies in taxpayer records or are unable to match a return to a record) which could affect around 4.5 million individuals who may have overpaid in total some £1.6 billion of tax and a further 1.5 million individuals who may have underpaid in total some £400 million of tax. HMRC guidance notes that flexible arrangements can be made, where necessary, to assist individuals and businesses who have unpaid tax debts. Such "Time to Pay arrangements", for example an agreed monthly payment schedule, are based on

244-470: A company are more motivated to work as their investment is based upon the performance of the company. SIP's are also an extremely effective tool for staff retention within a company as participants are only liable to pay tax on shares acquired in the last 5 years and will only be eligible for Matching shares if they stay with the company for 3 years after the purchase of Partnership shares. Increasing employee retention in this way results in less expenditure for

305-695: A landmark ruling by the European Court of Justice (ECJ). This decision reversed a previous European Commission ruling from 2019 that classified a UK tax exemption as illegal state aid, requiring HMRC to collect additional taxes. The tax exemption, applicable from 2013 to 2018, was designed to support British-based multinationals by exempting certain overseas financing activities from controlled foreign company (CFC) rules. These rules generally prevent companies from reducing tax liabilities by shifting profits to foreign subsidiaries. The exemption, initially introduced by former UK Chancellor George Osborne, aimed to make

366-407: A major review of the powers required by HMRC was announced at the time of the 2004 pre-budget report on 9 December 2004, covering the suitability of existing powers, new powers that might be required, and consolidating the existing compliance regimes for surcharges, interest, penalties and appeal, which may lead to a single, consolidated enforcement regime for all UK taxes, and a consultation document

427-740: A model for businesses looking to strengthen their own fraud prevention teams. He emphasized the growing sophistication of fraudulent activities, including the use of artificial intelligence in scams. Laffont highlighted that fraud accounts for over 40% of recorded crimes in England but receives only 2% of police resources, which disproportionately affects vulnerable populations. He further pointed out that tier 2 financial institutions are becoming prime targets for sophisticated criminal enterprises, posing risks to their customers. To combat these challenges effectively, Laffont advocates for rapid skill acquisition and holistic team development within organizations. He stresses

488-709: A number of other types of offences against the Treasury. The criminal investigation department is at the head of its Customer Compliance Group, known as Fraud Investigation Service (FIS). HMRC has a strong cadre of criminal investigators responsible for investigating Serious Organised Fiscal Crime. This includes all of the previous Customs criminal work (other than drug trafficking, but used to include this up until 2008) such as tobacco, alcohol, and oils smuggling. They have aligned their previous Customs and Excise powers to tackle previous Inland Revenue criminal offences. Fraud Investigation Service are responsible for seizing (or preventing

549-462: A report from Citizens Advice highlighted frustration amongst callers to HMRC over long holding times. The report claimed that "thousands" of callers were waiting on average 47 minutes to have their call answered, often at considerable expense to the caller. HMRC alleged that the "unscientific and out-of-date survey of tweets" did "not represent the real picture" but said that 3000 extra staff had been taken on to respond to calls. A June 2015 report from

610-430: A report. The report said: "We are deeply disappointed by HMRC's handling of whistleblowers. We consider that HMRC's use of powers reserved for tackling serious criminals against Mr Osita Mba was indefensible. HMRC told us that it had changed how it deals with whistleblowers and that it now provides information to its audit and risk committee who can use this to challenge how HMRC handles whistleblowers." In September 2015,

671-567: A value of £2.6 billion. In February 2010, HMRC encountered problems following the implementation of their taxes modernisation program called Modernising Pay-as-you-Earn Processes for Customers (MPPC). The IT system was launched in June 2009 and its first real test came in a period known as annual coding. Annual coding issues certain codes to tax payers on a yearly basis. The annual coding process sent out incorrect tax coding notices to some taxpayers and their employers meaning that they would pay too much tax

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732-430: Is payable when the shares are eventually removed from the SIP. In certain circumstances, prescribed by HMRC , there can be no Income Tax or National Insurance liability when the employee leaves the company, no matter how long the shares have been held in the plan.. Dividends paid on SIP shares can be re-invested in further shares known as Dividend Shares. Before 6 April 2013, the maximum amount of dividend reinvestment

793-758: Is the financial secretary to the Treasury , Nigel Huddleston MP The chairman of HMRC was an executive role until 2008. Mike Clasper served as a non-executive chairman. From August 2012, the post was abolished with a 'lead non-executive director' chairing board meetings instead. The chief executive is also the first permanent secretary for HMRC and the accounting officer. Executive chair and permanent secretary Non-executive board members as of November 2019: Source: See civil service grading schemes for details. HMRC's Criminal Investigators and Mobile Enforcement Officers deployed within Fraud Investigation Service are uniformed officers. HMRC Officers have

854-511: Is the lower, and a minimum of £10 per month). If the employee opts to make a lump sum contribution, the Partnership Shares must be purchased within 30 days of the deduction from salary. Contributions from salary can be accumulated for a period of up to 12 months. Partnership Shares must be purchased within 30 days of the end of the accumulation period; or contributions from monthly salary can be used to buy Partnership Shares within 30 days of

915-608: The Climate Change Levy . Other aspects of the department's responsibilities include National Insurance Contributions (NIC), the distribution of Child Benefit and some other forms of state support including the Child Trust Fund , payments of Tax Credits , enforcement of the National Minimum Wage , administering anti- money laundering registrations for Money Service Businesses and collection and publication of

976-465: The Department for Business, Innovation and Skills was published on 18 October 2012. Lawyers have suggested that the employee-owner scheme could have significant unintended consequences as, under the existing proposal, it may be possible for entrepreneurs to set themselves up as employee owners in order to avoid capital gains tax. In practice, those entrepreneurs will be far more 'owner' than 'employee' and

1037-582: The National Audit Office indicated that the total number of calls answered by HMRC fell from 79% in 2013–14, to 72.5% in 2014–15; however, a subsequent report in May 2016 suggested that performance improved following the recruitment drive. In November 2024, HM Revenue and Customs began refunding several major British companies, including firms listed on the London Stock Exchange and ITV , following

1098-555: The PAYE system, which meant it would receive information on tax and employee earnings from employers each month, rather than at the end of a tax year. A trial of the new system began in April 2012, and all employers switched by October 2013. In 2012, Revenue Scotland was formed and on 1 April 2015 it took HMRC responsibility to collect devolved taxes in Scotland . In 2015 Welsh Revenue Authority

1159-550: The Police and Criminal Evidence Act 1984 ) is to arrest anyone who has committed, or whom the officer has reasonable grounds to suspect has committed, any offence under the Customs and Excise Acts as well as related fraud offences. On 30 June 2006, under the authority of the new Labour home secretary , John Reid , extensive new powers were given to HMRC. Under chairman Sir David Varney, a new Criminal Taxes Unit of senior tax investigators

1220-525: The Regulation of Investigatory Powers Act (RIPA) "to examine the belongings, emails, internet search records and phone calls of their own solicitor, Osita Mba, and the phone records of his then wife" to find if he had spoken to the investigations editor of The Guardian , David Leigh . MPs in the House of Commons public accounts committee praised Osita Mba and called for scrutiny into HMRC's use of RIPA powers in

1281-486: The Treasury , so that the Treasury became responsible for "strategy and tax policy development" and HMRC took responsibility for "policy maintenance". In addition, certain investigatory functions moved to the new Serious Organised Crime Agency , as well as prosecutions moving to the new Revenue and Customs Prosecution Office. A further programme of job cuts and office closures was announced on 16 November 2006. Whilst some of

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1342-718: The national minimum wage and the issuance of national insurance numbers. HMRC was formed by the merger of the Inland Revenue and HM Customs and Excise , which took effect on 18 April 2005. The department's logo is the Tudor Crown enclosed within a circle. The department is responsible for the administration and collection of direct taxes including Income Tax , Corporation Tax , Capital Gains Tax (CGT) and Inheritance Tax (IHT), indirect taxes including Value Added Tax (VAT), excise duties and Stamp Duty Land Tax (SDLT), and environmental taxes such as Air Passenger Duty and

1403-776: The Customer Compliance Group (CCG) and the Fraud Investigation Service (FIS). The CCG, responsible for enforcing tax compliance and addressing issues such as tax evasion, saw its workforce grow from 25,656 full-time equivalent staff (FTE) in November 2021 to a peak of 28,617 in October 2022, before stabilizing at 26,841 in October 2023. The FIS, which conducts both civil and criminal investigations into serious fraud cases, also experienced growth, increasing from 4,244 FTE in November 2021 to 4,956 by October 2022, although it slightly decreased to 4,735 by October 2023. The financial commitment to

1464-498: The FIS is reflected in rising pay costs, which increased from £267.1 million in the 2021-2022 fiscal year to £288.8 million in 2022-2023, with an estimated expenditure of £286.2 million projected for 2023-2024. This investment underscores HMRC's ongoing dedication to protecting public revenue and ensuring tax compliance across the UK. Yves Laffont, Sector Lead for Financial Crime Consulting Services at FDM Group, noted that HMRC's efforts serve as

1525-464: The House of Lords and in business chambers across the country". The term "employee owner" was dropped in favour of the more accurate "employee shareholder". Lawyers have commented that uncertainty remains as to how these proposals will operate in practice. In April 2013, the Enterprise and Regulatory Reform Bill was passed and received Royal Assent . Implementation of the employee-shareholder provisions

1586-742: The Inland Revenue and HM Customs & Excise was announced by then chancellor of the Exchequer Gordon Brown in the budget on 17 March 2004. The name for the new department and its first executive chairman, David Varney , were announced on 9 May 2004. Varney joined the nascent department in September 2004, and staff started moving from Somerset House and New Kings Beam House into HMRC's new headquarters building at 100 Parliament Street in Whitehall on 21 November 2004. The planned new department

1647-402: The Inland Revenue's tax and National Insurance system from 1994 to 2004. In 2003, the launch of a new tax credit system led to over-payments of £2 billion to over two million people. EDS later paid £71.25 million in compensation for the disaster. In 2004, the contract was awarded to Capgemini . This contract, also with Fujitsu and BT , was one of the biggest ever IT outsourcing contracts, at

1708-405: The SIP in the 3-year period from the date of award if they leave the company. Income Tax and National Insurance may be payable on the market value of the shares at the date of removal, unless they leave due to injury or disability, redundancy, if the company or part of the business they work for is sold out of the group, retirement, or death. If Free Shares are removed between 3 and 5 years from

1769-421: The SIP. If the Partnership Shares remain in the SIP for more than 5 years no Income Tax or National Insurance is payable when the shares are eventually removed from the SIP. The purchase of Partnership Shares can be funded in 2 ways; either a single lump sum contribution once a year; or monthly contributions (subject to a maximum of £125 per month or 10% of salary (£150 per month from 6 April 2014), whichever

1830-399: The UK a more attractive headquarters for large international corporations. The European Commission initially contended that this exemption provided undue benefits to British companies, constituting illegal state aid, and required the UK to collect back taxes. However, the final appeal in 2024 sided with the UK, allowing HMRC to refund the affected companies and marking a significant moment in

1891-493: The chancellor had been expecting thousands of firms to actually sign up. Several types of tax advantaged schemes exist: HMRC His Majesty's Revenue and Customs (commonly HM Revenue and Customs , or HMRC ) is a non-ministerial department of the UK Government responsible for the collection of taxes , the payment of some forms of state support , the administration of other regulatory regimes including

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1952-405: The combined headcount of Customs (then around 23,000) and Inland Revenue (then around 68,000). In addition, 2,500 staff would be redeployed to "front-line" activities. Estimates suggested this may save around £300 million in staff costs, out of a total annual budget of £4 billion. The total number of job losses included policy functions within the former Inland Revenue and Customs which moved into

2013-496: The company on overheads such as recruitment and the training of new recruits. Companies running a SIP are also able to take advantage of Corporation tax relief for a variety of reasons including amongst others, the costs incurred putting the scheme in place & subsequent running costs including funding for maintenance of a trust. Employee share schemes in the United Kingdom Employee share schemes are part of

2074-417: The company they work for and become a share holder. By participating in a company's SIP an employee is able to share in the future success of the company. Research has also shown that a satisfied and incentivised workforce is more productive than an unsatisfied or non-incentivised workforce. For the company a SIP provides a number of advantages. Employees with a vested interest in the success and performance of

2135-548: The date of award, then Income Tax and National Insurance will be due on the lower value of the Free Shares at the date of award and their market value on the date on which they are withdrawn from the SIP. If the Free Shares remain in the SIP for more than 5 years, there will be no Income Tax or National Insurance liability when the shares are removed from the SIP. In certain circumstances, prescribed by HMRC , there will be no Income Tax or National Insurance liability when

2196-418: The date of purchase, Income Tax and National Insurance will be payable on the market value of the shares at the date of removal. If the Partnership Shares are removed between 3 and 5 years from the date of purchase, then Income Tax and National Insurance will be due on the lower of the value of the Partnership Shares at the date of award and their market value on the date on which they are withdrawn from

2257-539: The debtor's specific financial circumstances and the guidance notes that no "standard" Time to Pay arrangement exists. Interest is payable on a Time to Pay arrangement. In 2007–08 HMRC overpaid tax credits to the value of £1 billion; at the end of March 2009, HMRC had £4.4 billion of overpayments to be recovered. On 20 November 2007, the Chancellor of the Exchequer , Alistair Darling , announced that two discs that held

2318-417: The deduction. The company can give employees up to 2 Matching Shares for each Partnership Share they buy. These shares will be free of Income Tax and National Insurance at the date of award. An employee can normally only take their Matching Shares out of the SIP in the 3-year period from the date of award if they leave the company. Income Tax and National Insurance will be payable on the market value of

2379-403: The employee leaves the company, no matter how long the shares have been held in the plan. Employees can use their pre-tax salary to buy shares up to a maximum of £1,800 or 10% of salary (whichever is the lower) each year. Partnership Shares will be free of Income Tax and National Insurance at the date of purchase. If an employee takes their Partnership Shares out of the SIP within 3 years of

2440-461: The employment rights they will be giving up are likely to be of much less value to them than to ordinary employees and so the tax advantages would be of far greater value to them than to ordinary employees. On 3 December 2012, the government published its response to the consultation. It had decided to press ahead with the changes despite 92% of responses to the consultation being either "negative" or "mixed" and despite it being "widely derided both in

2501-536: The first time, to have the same ability as customs officers to monitor suspects and arrest them. On 19 July 2006, the executive chairman of HMRC, Sir David Varney resigned. HMRC is also listed under parts of the British government which contribute to intelligence collection, analysis and assessment. Their prosecution cases may be co-ordinated with the police or the Crown Prosecution Service . The merger of

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2562-493: The following year. In August 2010, seven HMRC staff were sacked for deliberately underpaying benefits to ethnic-minority claimants. Dave Hartnett, permanent secretary for tax at HMRC, said the department operates a zero-tolerance policy on racial discrimination. The whistleblower Osita Mba revealed to The Guardian that HMRC entered a deal with Goldman Sachs which allowed Goldman Sachs to escape paying £10 million interest on unpaid tax. Following this HMRC used powers under

2623-601: The interest to be bought and sold. In July 2012, the Department for Business Innovation and Skills published a report, "The Employee Ownership Advantage, Benefits and Consequences". This report listed several major advantages of employee ownership including stronger longterm focus, increased employee representation at the board level and greater preference for internal growth. The report also highlighted that employee owned businesses face greater problems when it comes to raising capital and dealing with regulatory requirements. The study

2684-535: The legal landscape for UK tax and state aid policy. Revenue and Customs Digital Technology Services (RCDTS) is a subsidiary of HMRC established in 2015 to provide technical and digital services. The company works exclusively for HMRC and its employees are not civil servants . On 17 January 2022, HMRC announced its intention to wind up the company. HMRC has made a substantial investment of nearly £300 million to enhance its compliance and fraud investigation efforts. This funding has led to an increase in staffing within

2745-550: The loss of) billions of stolen pounds of HMG 's revenue. Their skills and resources include the full range of intrusive and covert surveillance and they are a senior partner in the Organised Crime Partnership Board. HMRC's criminal investigation department is Fraud Investigation Service (FIS). Officers deployed in their criminal investigation teams have the same powers as police officers, and have wide-ranging powers of arrest, entry, search and detention. HMRC have

2806-450: The offices closed were in bigger cities where other offices already exist, many were in local, rural areas, where there is no other HMRC presence. Initial proposals indicated that up to 200 offices would close and a further 12,500 jobs lost from 2008 to 2011. In May 2009, staff morale in HMRC was the lowest of 11 government departments surveyed. In 2013, HMRC began to introduce an update to

2867-554: The personal details of all families in the United Kingdom claiming child benefit had gone missing. This is thought to affect approximately 25 million individuals and 7.5 million families in the UK. The missing discs include personal details such as name, date of birth, National Insurance number, and bank details. The then chancellor stated that there was no indication that the details had fallen into criminal hands; however, he urged people to monitor their bank accounts. EDS ran

2928-520: The power to apply for orders requiring information to be produced; apply for and execute search warrants; make arrests; search suspects and premises following arrest; and recover criminal assets through the Proceeds of Crime Act 2002. They also have extensive surveillance powers that authorised criminal investigation officers are trained to utilise. The main power, under section 138 of the Customs and Excise Management Act 1979 (as amended by section 114 of

2989-570: The remuneration packages offered to some employees in the United Kingdom. ESOPs became widespread for a short period in the UK under the government of Margaret Thatcher , particularly following the Transport Act 1985 , which deregulated and then privatised bus services. Councils seeking to protect workers ensured that employees accessed shares as privatisation took place, but employee owners soon lost their shares as they were bought up and bus companies were taken over. The disappearance of stock plans

3050-441: The same powers as police officers, but their equivalent police ranks are at a higher grade (see table below): & Chief inspector HMRC collected £660 billion for the Treasury in 2018/19. It estimated that total theoretical tax liabilities in that year were £629 billion, but £31 billion was not collected due to the " tax gap ", made up of money lost to tax evasion , tax avoidance , error and unpaid tax debts. This equates to

3111-480: The shares at the date of removal. If the Matching Shares are removed between 3 and 5 years from the date of purchase, then Income Tax and National Insurance will be due on the lower of the value of the Matching Shares at the date of award and their market value on the date on which they are withdrawn from the SIP. If the Matching Shares remain in the SIP for more than 5 years no Income Tax or National Insurance

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3172-659: The trade-in-goods statistics. Responsibility for the protection of the UK's borders passed to the UK Border Agency within the Home Office on 1 April 2008 and then to UK Border Force and the National Crime Agency in 2013; however, HMRC officers are also regularly deployed at the border to assist on operations. HMRC is also a law enforcement agency, responsible for investigating and tackling tax fraud, excise (tobacco & alcohol) fraud, smuggling, money laundering and

3233-773: Was announced formally in the Queen's Speech of 2004 and a bill , the Commissioners for Revenue and Customs Bill, was introduced into the House of Commons on 24 September 2004, and received royal assent as the Commissioners for Revenue and Customs Act 2005 on 7 April 2005. The Act also creates a Revenue and Customs Prosecutions Office (RCPO) responsible for the prosecution of all Revenue and Customs cases. The old Inland Revenue and Customs & Excise departments had very different historical bases, internal cultures and legal powers. The merger

3294-796: Was based on data from a survey of 41 employee-owned businesses and 22 non-employee owned businesses in the United Kingdom, and also draws upon the published financial data of 49 EOBs and 204 non-EOBs in the UK. The Chancellor of the Exchequer George Osborne announced in a speech at the Conservative Party Conference on 8 October 2012 that the law would be reformed to create a new employment status for "employee-owners". Employee-owners will pay no capital gains tax on any profit made from selling these shares. Still, they will have to give up certain employment rights in return, including redundancy and unfair dismissal . The consultation by

3355-492: Was created to target suspected fraudsters and criminal gangs. To disrupt and clamp down on criminal activity. This HMRC/CTU would pursue suspects in the same way the US Internal Revenue Service caught out Al Capone on tax evasion . These new powers included the ability to impose penalties without needing to prove the guilt of suspected criminals; extra powers to use sophisticated surveillance techniques, and for

3416-631: Was described by the Financial Times on 9 July 2004, as "mating the C&;E terrier with the IR retriever". For an interim period officers of HMRC are empowered to use existing Inland Revenue powers in relation to matters within the remit of the old Inland Revenue (such as income tax , stamp duty and tax credits ) and existing Customs powers in relation to matters within the remit of the old Customs & Excise (such as value added tax and excise duties ). However,

3477-542: Was dramatic. The John Lewis Partnership has been cited as an example of an employee share ownership. However, unlike some other employee ownership arrangements, partners in John Lewis have no proprietary right to their stake and cannot buy or sell their rights or collectively dissolve the entity. ESOPs are almost entirely opposite because at John Lewis, employees get a voice at work but cannot trade an ownership stake; an ESOP typically carries no meaningful voice but allows

3538-405: Was expected to take place in October 2013. The employee ownership provisions received significant amendment in the House of Lords, with the unintended consequence possibly being that trade unions may now benefit. At the end of June 2013, it emerged that just four companies had enquired about the shares-for-rights scheme, while only two had gone the further step of asking for information about it;

3599-591: Was formed and on 1 April 2018 it took HMRC responsibility to collect devolved taxes in Wales. On 12 November 2015, HMRC proposed to replace local offices with 13 regional centres by 2027. The board is composed of members of the executive committee and non-executive directors . Its main role is to develop and approve HMRC's overall strategy, approve final business plans and advise the chief executive on key appointments. It also performs an assurance role and advises on best practice. The Treasury minister responsible for HMRC

3660-470: Was published after the 2005 budget on 24 March 2005. Legislation to introduce new information and inspection powers was included in the Finance Act 2008 (Schedule 36). The new consolidated penalty regime was introduced via the Finance Act 2007 (Schedule 24). As part of the spending review on 12 July 2004, Gordon Brown estimated that 12,500 jobs would be lost as result of the merger by March 2008, around 14% of

3721-429: Was £1,500 per participant in a tax year. From 6 April 2013, the statutory reinvestment limit ceased to apply, however employers may continue to specify a limit if they choose. These shares are free of Income Tax and National Insurance at the date of purchase. An employee can only take their Dividend Shares out of the SIP in the 3-year period from the date of award if they leave the company. Dividend Shares are subject to

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