1.  The Chartered Institute of Management Accountants (CIMA) is one of the six chartered bodies of accountants in the United Kingdom and the Republic of Ireland. It has almost 40,000 members and more than 46,000 students in the UK with a further 12,500 members and 24,000 students overseas.

  2.  A significant proportion of accountants working in UK Government Departments and Executive Agencies are CIMA members or students. More significantly, the majority or our UK based members in industry and in practice would have regular contact with both Customs & Excise and Inland Revenue.

  3.  With respect to the Sub-Committee's terms of reference, CIMA has determined that it will submit evidence on point 3, ie the potential for closer working and merger of Customs and Excise & Inland Revenue.

  4.  A merger of these agencies would have little direct impact on the work of the majority of management accountants. Companies will still be required to maintain prime records and vouchers for both VAT and Inland Revenue.

  5.  Nevertheless, 727 of our UK based members, ie approximately 50 per cent of our UK members in practice and just fewer than 2 per cent of our total UK membership, act as taxation advisors or agents. CIMA would expect that these members should derive a positive benefit from a merger of Inland Revenue and Customs & Excise via increased joint visitation and reviews of businesses by agency inspectors.

  6.  CIMA welcomes any reduction in compliance costs to business, which would result from these agencies merging. Fewer total visits and more combined purpose visits should reduce the compliance burden on business and citizens and make a positive contribution to the international competitiveness of UK businesses.

  7.  Therefore, in principle CIMA generally welcomes the proposal for a merger of Customs & Excise and Inland Revenue. Such a merger should provide cost savings and administrative efficiency gains for the combined agency. CIMA submits that expected savings and improvements should be clearly identified in advance of the merger and organisational performance against these objectives should be subsequently reported.

  8.  CIMA notes the information exchange concerns outlined in the Treasury Committee Sixth Report on the working of Inland Revenue, paragraph 75, relating to the protection of information gathered under different legal instruments. Specifically, it refers to the assertion that there are no legal impediments to the exchange of information between officers of the two agencies and the apparent contradiction in the Closer Working Guide which outlines, in considerable detail, procedures for maintaining separation in inspection roles under different legal instruments. CIMA would be concerned about any potential for unlawful sharing of information within a merged agency, which would increase the burden on compliant businesses.

  9.  With respect to point 7, CIMA supports the recommendation of the Treasury Committee Sixth Report on the working of Inland Revenue, paragraph 81, that the Government commission an independent study to assess the feasibility of merging the two departments, addressing the following issues:

—  the potential for savings in public expenditure from administrative efficiencies;

—  the potential for reductions in compliance costs to business and citizen;

—  the potential for reducing black economy activity through a merger or closer working together between the agencies;

—  any legal or procedural issues with respect to the collection, exchange and protection of information between the two agencies resulting from a merger;

—  the need for changes in legislation to accommodate desirable exchanges of information within a merged agency; and

—  recommendation of a timetable and process for any proposed merger, with measurable and quantified objectives and an agreed procedure for post implementation reporting.

  Thank you for the opportunity to contribute to this process. CIMA has no objection to its submission being made public. CIMA would be prepared to supplement this report with an oral report to the Committee if the Committee deems this useful for their deliberations.

27 September 1999