HM Income & Customs is making ready to embark on a expertise spending programme value greater than £2 billion over the subsequent two years, as long-running efforts to modernise its ageing IT property proceed to run into delays and rising prices.
Based on HMRC’s newest procurement pipeline, the tax authority will start with a large-scale information warehouse transformation programme, anticipated to be value round £410 million. The contract will mix the working and modification of current techniques with the migration and eventual decommissioning of legacy information warehouse platforms.
Procurement paperwork state that HMRC intends to award a single contract to ship the transformation of its legacy information warehouses, changing no current settlement. The legacy expertise is extensively understood to incorporate SAP’s ECC Enterprise Warehouse, which sits on the centre of HMRC’s wider enterprise useful resource planning overhaul.
SAP has already secured main uncontested contracts with HMRC, together with a £246 million ERP modernisation deal and a separate £275 million improve to core tax techniques, each awarded and not using a aggressive tender.
One of many largest upcoming procurements is a £350 million contract for public cloud computing providers with Amazon Internet Companies, changing an current AWS settlement of the identical worth. The pipeline additionally highlights a £306 million contract for “Digital Platforms Run and Change Merchandise”, masking IT providers to help reside software providers, together with legacy platforms. This might substitute a contract awarded to Accenture in Might 2024, additionally valued at £306 million.
Past these headline tasks, HMRC has an extra sequence of huge procurements deliberate, every exceeding £200 million. These embody a £250 million mobility and office providers contract to help employees gadgets and helpdesk features; a £250 million deal for digital platforms supporting techniques such because the Authorities Gateway and buyer perception instruments; and a £220 million information centre providers contract.
One other important settlement is the £214 million “Legacy – Retained HMRC Companies Contract”, which HMRC has flagged as a direct award. It will substitute the present Core Enterprise Platform Help and Upkeep Companies contract, beforehand awarded to Capgemini for £214.5 million and not using a aggressive course of. That deal was later prolonged, once more with out competitors, by an extra £107 million.
Within the 2024–25 monetary 12 months, HMRC spent £1.16 billion on IT and telecommunications whereas accumulating £858.9 billion in tax revenues. Below the federal government’s most up-to-date Spending Evaluation, departments had been required to undertake a Zero-Primarily based Evaluation of budgets, with a robust emphasis on digital transformation. In consequence, HMRC has been allotted a further £1.6 billion between 2026–27 and 2028–29 particularly to modernise its IT and information infrastructure.
Nonetheless, the Nationwide Audit Workplace has warned that progress has been slower and costlier than anticipated. In a report printed in November 2025, the NAO stated HMRC was taking longer than deliberate to exit legacy techniques and had but to understand the anticipated effectivity features from its digital providers programme.
“HMRC has not but achieved the anticipated efficiencies from its digital providers,” the watchdog stated, elevating questions on worth for cash as spending continues to escalate.
A spokesperson for HMRC stated: “We’re investing in new expertise so we will present higher providers for our clients. We comply with authorities procurement guidelines when awarding these contracts to make sure worth for cash for taxpayers.”
With billions extra set to be spent on expertise modernisation, strain is mounting on HMRC to exhibit tangible enhancements in effectivity, service high quality and system resilience because it makes an attempt to lastly transfer away from decades-old infrastructure.
Amy Ingham
Amy is a newly certified journalist specialising in enterprise journalism at Enterprise Issues with accountability for information content material for what’s now the UK’s largest print and on-line supply of present enterprise information.
