The big cultural problems involved in merging Customs & Excise and the Inland Revenue are exemplified by one group of people: officers with responsibility for combating smuggling.
Gus O'Donnell, the top Treasury civil servant who is expected to recommend that the two departments with responsibility for collecting the nation's taxes come together, has concluded that in the short term the combined organization should include the men and women who safeguard the UK's borders, according to Whitehall officials.
But one official said that Mr O'Donnell had concluded they should have their status reviewed once the expected merger is completed.
Customs has more than 4,000 officers based at airports and ports to tackle drugs trafficking and illegal importing of goods.
Their work has assumed heightened importance since the al-Qaeda attacks of September 11 2001 and they liaise closely with anti-terrorist police and immigration officials.
The Whitehall official said the officers could be better off placed outside the combined organisation because it would be focused on collecting tax.
A former Customs official said: "I would take this out of any merger because I do not see there are any synergies."
Several Whitehall officials noted how Canada, which combined its customs and revenue departments in 1993, took the decision last year to move out officers who safeguard the country's borders. The reform was one of the first acts of Paul Martin, Canada's then newly installed prime minister, and was part of efforts to enhance security co-operation with the US.
Across Whitehall and among tax experts there was unanimity that the Customs-Revenue marriage would pose massive challenges.
One official said Customs had a track record of dealing aggressively with companies on tax, in contrast to the Revenue. He said the Revenue's more friendly and professional approach was a product of another era: the time, before the second world war when it had mainly dealt with wealthy, law-abiding taxpayers.
Mr O'Donnell's review has examined how to guard against a merger of Customs and the Revenue distracting their staff from the core task of collecting tax. Customs has 23,000 staff and the Revenue 76,000, and both departments have acting heads.
Gossip in Whitehall about a possible head of the combined department yesterday focused on Leigh Lewis, second permanent secretary at the Home Office. He supervised the merger of benefit and employment offices into the Jobcentre Plus programme.
One significant obstacle to a merger of Customs and Revenue could be their different information technology systems. Fijitsu provides systems at Customswhile the Revenue is switching from EDS to Cap Gemini Ernst & Young after significant problems with IT over the past two years.
PA Consulting, the management consultants, said early gains from merger could be found in approaches favoured by Sir Peter Gershon and Sir Michael Lyons in their reviews of government efficiency and civil service relocation outside the south-east.
Michael O'Higgins, head of IT consulting at PA Consulting, said gains could be made by sharing back office services and IT systems, given the focus of Customs and Revenue on the collection of tax.
