AFC0077

Written evidence submitted by HM Revenue and Customs

Thank you for your letter dated 26 February 2025.

Firstly, I would like to confirm that HMRC is already committed to honour the Armed Forces Covenant and endeavours to uphold its two principles in its business dealings. The proposed change is to extend the Covenant Legal Duty of due regard for those principles to central Government Departments. HMRC is working with the Ministry of Defence and with HM Treasury, the lead Department for tax policy development, to fully define what this will mean for tax policy-making.

The two principles are:

1. Those who serve in the Armed Forces, whether Regular or Reserve, those who have served in the past, and their families, should face no disadvantage compared to other citizens in the provision of public and commercial services.

2. Special consideration is appropriate in some cases, especially for those who have given most such as the injured and the bereaved.

On that basis, in answer to the question “What impact would the extension of the Armed Forces Covenant legal duty to central government and devolved administrations have?” I would advise the following:

HMRC is confident that in respect of personal tax administration, customer service and operational policy, no disadvantage occurs but would welcome feedback if the Committee finds otherwise in the course of its inquiry.

When considering this from a tax system perspective, HMRC has a track record of working proactively with the Ministry of Defence (MoD) on the Covenant and support to the armed forces community, including liaising on exemptions requested through formal channels, such as those sought for the ‘Modern Accommodation Offer’. HMRC liaises regularly with the MoD Armed Forces Covenant Team, including for consideration of requests to clarify policy interpretation or guidance as it applies to service personnel. If issues are identified that impact widely on service personnel, these may also be presented to the Armed Forces Covenant Reference Group, at which HMRC fields appropriate subject matter experts on request, to explore issues and provide a response.

From an employer perspective, HMRC has a proactive Armed Forces Champion supported by a network of Reserves and Veterans Advocates, whose aim is to make HMRC a forces- friendly organisation. Consequently, the Department is widely recognised as an exemplar employer in respect of supporting reserves and veterans’ employability initiatives. In 2015 the Department was presented with the Silver Defence Employer Recognition Scheme in recognition of this work. We have since built upon this approach to widen our support to the Armed Forces Community, including forces families’ members and Cadet Force Adult Volunteers.

The Department is also a signatory to the Armed Forces Covenant, which Sir Jim Harra signed in 2020.

Our HR Policy team are considering the potential impacts of the extended Legal Duty from an employer perspective and will work with Government People Group on cross Civil Service employment positions in this regard. The main impact identified to date is the potential requirement for flexibility in respect of working locations for spouses of armed forces personnel, if already employed by HMRC and subsequently posted overseas, or elsewhere in the UK. Whilst most Civil Service job vacancies do require individuals to be resident in and work from the UK, to help us meet the covenant, HMRC considers each case individually due to security and role requirements.

HMRC is already proactive in supporting forces families, having participated in the ‘Living in Our Shoes’ review, published in June 2020. The Department advertises numerous vacancies on the Forces Families Jobs portal, which aims to promote employment that is suited to the mobility requirements of service life. HMRC's Armed Forces Covenant (signed in 2020) also already commits us to offering flexible working arrangements for service spouses during a partner’s deployment.

HMRC is also recognised as being highly proactive and supportive of veterans and service leavers seeking to transition into civilian employment in the Civil Service. The Department was the first to launch its own Service Leavers Internship program (RISE) and continues to advertise numerous vacancies on the Going Forward into Employment (GFIE) Veterans programme and the Great Place to Work for Veterans scheme.

We are also proud of our 180+ HMRC colleagues who serve as part-time volunteer reservists and our support package which encourages colleagues to serve includes paid special leave for training, which contributes to a good work-life balance that in turn aids retention in the reserves. Our reserves policy also stipulates that we will not appeal any reasonable mobilisation request from the MoD.

To further strengthen our support to the Defence Community, HMRC has nominated a designated senior official to be responsible for ensuring that HMRC complies with any obligations under the extended Legal Duty, as it may apply to personal taxation, in both our policy advice to Ministers and our administrative services to customers.

Angela MacDonald

DEPUTY CHIEF EXECUTIVE AND SECOND PERMANENT SECRETARY

17th March 2025