ADML3200 - Collection and Management: Legal Background

The law concerning the duties of the Commissioners for Revenue and Customs is in the Commissioners of Revenue and Customs Act 2005 (CRCA). Section 5 of CRCA states:

The Commissioners shall be responsible for

(a) the collection and management of revenue for which the Commissioners of Inland Revenue were responsible before the commencement of this section,

(b) the collection and management of revenue for which the Commissioners of Customs and Excise were responsible before the commencement of this section, and

(c) the payment and management of tax credits for which the Commissioners of Inland Revenue were responsible before the commencement of this section

HMRC is therefore responsible for the:

(i) collection of tax revenues as conferred under section 5 of CRCA,

(ii) payment of tax credits as conferred under section 2 of the Tax Credits Act 2002 (TCA) and section 5 of CRCA,

(iii) payment of Child Benefit as conferred under section 50 of TCA and section 53 of CRCA

and must manage them in the most effective way.

This means that HMRC must apply the law correctly and the Commissioners cannot choose to move away from this position merely because the result seems unfair or unreasonable. To move away from the strict application of the law in this way would be contrary to the will of Parliament.

However there may be circumstances where applying the discretion would result in a more efficient management of the revenue and in such cases the Commissioners can choose to do so. This discretionary power rests with the Commissioners of HMRC, and through them its officers. It cannot be exercised by ministers or other departments, including HM Treasury.

The circumstances in which the Commissioners can exercise their discretion under their powers of collection and management are set out in case law and are tightly defined. Further information on this is provided in ADML3400.

There is no right of appeal against HMRC’s decision to exercise discretion or not to exercise discretion, however the decision may be challenged by judicial review.