Board of Inland Revenue

INLAND REVENUE, BOARD OF. The period follow ing the English Revolution of 1688 is on many accounts notable in the history of British public finance. Taxation, in particular, under the pressure of war with France, was reorganized in extent and character. In 1689 the Excise Board was reconstituted. Stamp duties were imposed and a Board of Stamps formed in 1694. A new tax on the yearly value of property, first imposed in 1692, was continued from 1697 by annual acts. For this, the ancient machinery for a time sufficed under which commissioners for divisions of every country had raised "aids" voted by parlia- • ment. A Board of Taxes was appointed in 1718. In 1797 Great Britain and Ireland were covered by six boards, of excise, stamps and taxes severally. Three excise boards were united in 1823. Ten years later stamps and taxes passed under joint administra tion. Finally, in 1849, the first Board of Inland Revenue em braced excise, stamps and taxes. In 1909 the excise passed to the Board of Customs, the Board of Inland Revenue retaining its title.

The board is constituted by letters patent, and consists of a chairman, a deputy chairman and three commissioners who are secretaries of the department and commissioners ex officio. The office is at Somerset House, London.

Scope and Functions.—The following are the sources of in land revenue : 1. Stamp Duties. On documents of various kinds, which are inadmissible in evidence unless duly stamped.

2. The "Death Duties." These are stamp duties on documents connected with the administration of estates by executors and next of kin, or the receipt of property by beneficiaries. They comprise the estate duty, which is a tax on the capital value of property passing upon death, together with the legacy and suc cession duties.

3. Income Tax and Super Tax. The former is a flat-rate tax upon annual income or profits, as such. The latter is a surtax at rates graduated by reference to total income of the individual where this exceeds a certain sum. The surtax on the more affluent, and a system of personal allowances and reliefs which effectively reduce the burden on smaller incomes, form the means of adjust ing the incidence upon individuals. Other taxes included in inland revenue are comparatively insignificant.

In relation to income tax and the super tax, or surtax, the func tions of the department extend to Great Britain and Northern Ireland; otherwise, to Great Britain alone.

Organization and

Methods.—Stamp duties on documents requiring assessment are ascertained in the branch of the con troller of stamps, at Somerset House. In commercial practice, the proper duty is often clear, and in such cases the document is normally drawn on stamped material. The stamps are for the most part impressed by means of dies, but adhesive stamps may be employed in certain cases. The death duties are assessed in the estate duty office at Somerset House.

Income Tax

Methods.—Income tax is assessed locally. The income tax when imposed in 1842 was a lineal successor of the annual property tax of 1697. Local assessment was an inherited feature of the tax, which was, and still is, assessed by honorary commissioners for divisions of each county, with a surveyor of taxes intervening to safeguard the Crown. Appeals against assess ments are also determined by these commissioners, and their functions in this respect constitute the most valuable and respon sible part of their duties. Modern conditions have rendered the ascertainment of taxable profits often highly intricate, and liability is wherever possible, agreed by the surveyor (now the inspector) of taxes, before assessment. The tax inspectorate, organized in district offices, forms a branch under the direction of the chief inspector of taxes at Somerset House.

The district inspectors are also concerned in the reduction by the local commissioners where necessary, of income tax assess ments, in carrying out the allowances and reliefs due to individual taxpayers, and in repayments. Income tax upon profits, being charged upon the business by which the profits are earned, is deducted from interest and dividends before receipt by the tax payer (collection "at the source") who therefore in numerous cases requires repayment.

Certain income tax assessments and all super tax, or surtax, assessments are made by the special commissioners of income tax, a body appointed by the Treasury. The basis of liability for super tax is income tax liability already determined, and the inspector of taxes therefore does not intervene. The special com missioners also determine appeals against assessments, and exer cise their most important functions in this judicial capacity. As a judicial body the special commissioners, like the local com missioners, are independent of the Board of Inland Revenue.

In addition to the system of income tax and super tax appeals, there exists appropriate machinery for determination of all cases of disputed liability to revenue duties. The procedure issues ultimately in reference, where and so far as necessary, to the law Courts. A legal branch is maintained under the solicitor of inland revenue.

Payment of duties other than income tax is made direct to the department. Income tax is largely gathered by collectors, appointed locally. The accountant-general at Somerset House receives and makes payments, keeps necessary accounts and controls repay ments and all expenditure. A valuation office is employed to value lands, tenements and hereditaments upon which death duties are payable. The branch of the director of stamping at Somerset House is responsible for the mechanical work of producing revenue stamps, and constitutes a factory of moderate size. A central office at Edinburgh, under the comptroller of stamps and taxes, Scotland, performs duties corresponding to those of the executive and accounting branches in London.

A report made by the board is annually laid before parliament All accounts are audited by the comptroller and auditor-general. who is independent both of the department and of the Treasury.

The total cost of inland revenue services represents some I • 7 % of the gross receipts. (See ESTATE DUTIES; INCOME TAX.) of the Commissioners of Inland Revenue (1857 and annually) ; Report and Minutes of Evidence of Royal Commission on Income Tax (192o). (W. V. BR.)