Integration in the public sector: HM Revenue and Customs
A HMRC case study

Page 1: Introduction

To integrate or merge means to join together. There are often advantages for two organisations to merge to become one. The most important is that it enables greater efficiency. It can also give a better service to customers. This case study looks at the recent integration of Inland Revenue and Customs & Excise to create a new, more efficient HM Revenue and Customs (HMRC). HMRC is...
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Page 2: Why integrate the Inland Revenue and HM Cutoms?

Gordon Brown, The Chancellor of the Exchequer, asked for an independent review into whether this integration would be a good idea. Gus O'Donnel, a leading civil servant, produced the review. His report, 'Financing the Future', came to the conclusion that it would be. Gordon Brown announced the decision to merge the Inland Revenue and HM Customs in the 2004 Budget and the two departments became one...
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Page 3: Types of integration

The three main types of integration for organisations are described according to the direction of the integration. Vertical integration This occurs when one organisation takes over another at an earlier or later stage of production or work. For example, if HMRC bought up some of the businesses that supply it with paper, this would be described as backward vertical integration. Backward means...
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Page 4: The impact of integration on business operation

The integration of HMRC required a new structure. An Executive Committee similar to a Board of Directors in a public company is in control. It decides the strategy and business plan for the organisation. An executive makes decisions and ensures they are carried out. HMRC is now divided into 36 business areas, each one led by a Director and reporting to an Executive Committee Member. The...
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Page 5: The impact and benefits of integration on stakeholders

Impact A stakeholder is an individual or organisation that has an interest in how an organisation is run. Some of the main HMRC stakeholders and their interests are: employees looking for more rewarding work and seeing their organisation well run government looking for lower costs that are likely to result from integration. So every stakeholder stands to benefit from the integration...
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Page 6: Conclusion

The O'Donnel Review made a strong case for integrating the Inland Revenue and HM Customs and Excise. This integration is not a one off 'Big Bang' process. There will be change in the future to produce more savings and benefits. This enables this purpose to be carried out more effectively. HMRC must be accountable to the public and other stakeholders. A single body designed to focus on consumers...
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