HM Income & Customs is getting ready to embark on a know-how spending programme value greater than £2 billion over the following two years, as long-running efforts to modernise its ageing IT property proceed to run into delays and rising prices.
In keeping with HMRC’s newest procurement pipeline, the tax authority will start with a large-scale knowledge warehouse transformation programme, anticipated to be value round £410 million. The contract will mix the operating and modification of current programs with the migration and eventual decommissioning of legacy knowledge warehouse platforms.
Procurement paperwork state that HMRC intends to award a single contract to ship the transformation of its legacy knowledge warehouses, changing no current settlement. The legacy know-how 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 programs, each awarded with out a aggressive tender.
One of many largest upcoming procurements is a £350 million contract for public cloud computing companies with Amazon Internet Providers, 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 companies to help dwell utility companies, together with legacy platforms. This could substitute a contract awarded to Accenture in Might 2024, additionally valued at £306 million.
Past these headline initiatives, HMRC has an additional collection of enormous procurements deliberate, every exceeding £200 million. These embody a £250 million mobility and office companies contract to help employees units and helpdesk capabilities; a £250 million deal for digital platforms supporting programs such because the Authorities Gateway and buyer perception instruments; and a £220 million knowledge centre companies contract.
One other important settlement is the £214 million “Legacy – Retained HMRC Providers Contract”, which HMRC has flagged as a direct award. This can substitute the present Core Enterprise Platform Assist and Upkeep Providers contract, beforehand awarded to Capgemini for £214.5 million with out a aggressive course of. That deal was later prolonged, once more with out competitors, by an additional £107 million.
Within the 2024–25 monetary yr, HMRC spent £1.16 billion on IT and telecommunications whereas gathering £858.9 billion in tax revenues. Below the federal government’s most up-to-date Spending Assessment, departments had been required to undertake a Zero-Primarily based Assessment of budgets, with a powerful emphasis on digital transformation. Because of this, HMRC has been allotted an extra £1.6 billion between 2026–27 and 2028–29 particularly to modernise its IT and knowledge infrastructure.
Nonetheless, the Nationwide Audit Workplace has warned that progress has been slower and costlier than anticipated. In a report revealed in November 2025, the NAO mentioned HMRC was taking longer than deliberate to exit legacy programs and had but to grasp the anticipated effectivity positive aspects from its digital companies programme.
“HMRC has not but achieved the anticipated efficiencies from its digital companies,” the watchdog mentioned, elevating questions on worth for cash as spending continues to escalate.
A spokesperson for HMRC mentioned: “We’re investing in new know-how so we will present higher companies for our prospects. We observe authorities procurement guidelines when awarding these contracts to make sure worth for cash for taxpayers.”
With billions extra set to be spent on know-how modernisation, strain is mounting on HMRC to reveal tangible enhancements in effectivity, service high quality and system resilience because it makes an attempt to lastly transfer away from decades-old infrastructure.
