The proposed merger of Customs & Excise and the Inland Revenue should not lead to one institution with powers levelled up to the greater of the two, an official Law Society response to the planned union said this week.

A paper submitted to the Treasury sub-committee welcomed the merger, but warned that 'any alignment of powers following the integration of the two departments should not result in an automatic levelling up of the powers to the highest level currently applied'.

Edward Troup, a partner in the tax department of City firm Simmons & Simmons and a member of the Society's tax committee, said: 'At the moment, Customs has wider powers of entry than the Revenue - but if those powers are applied to all taxes within a merged structure, that raises the possibility that the Revenue might come banging on company doors for alleged mistakes with expenses accounting.'

Elsewhere, the paper recommended that the merged body should be subject to systemic checks and balances 'to ensure that particular policies are subjected to adequate pre-and post-implementation review'.

It also warned that the Treasury tax team - which will develop policy - might not attract and retain high-quality staff and secondees as a result of inadequate remuneration.

Jeremy Fleming