HM Revenue & Customs continues quest to develop digital presence by ditching IT contract that cost it £10bn

Hayley Kirton
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Dustmen's Strike
Out with the old, in with the new for HMRC's IT systems (Source: Getty)

The UK's tax authority made another move in its mission to go fully digital today by dropping an IT contract worth £10bn.

HM Revenue and Customs (HMRC) has agreed a phased exit from a contract with IT suppliers Aspire in favour of seeking services from a wider range of companies from next month onwards.

By contracting with multiple companies, including SMEs, HMRC believes it will be better placed to take advantage of emerging technologies, such as open-source software and cloud services, and ultimately provide better value for money for taxpayers.

"HMRC's ambition is to be one of the most digitally-advanced tax authorities in the world, and the agreement we have reached to exit the Aspire contract brings that a huge step closer," said Lin Homer, chief executive of HMRC. "Our new approach enables HMRC to secure the adaptable, cutting-edge IT services we need to transform our services to customers and modernise the way we work, at much better value for money for the taxpayer."

Read more: Seven things you didn't know about your tax return

The contract with Aspire, which was due to expire in 2017, cost £10bn for 10 years service.

HMRC has calculated that dropping the contract will cut its IT services bill by 24 per cent, or around £200m, by the tax year 2020-21. By comparison, the tax authority forked out £854m on IT in 2014-15.

At the end of last year, HMRC officially launched its digital Personal Tax Accounts (PTA), which aim to give people are clearer and more real-time overview of their tax affairs. At the time, the taxman estimated that every individual and small business should have access to their PTA by the end of next month.

Read more: HMRC tax offices closures could actually cost the taxpayer

However, HMRC's shift to digital has not proved popular with everybody, with many lashing out at proposals that would require most businesses, self-employed and landlords to track of their tax affairs digitally and update HMRC of their position on a quarterly basis.

People were so outraged with the idea that a petition against having to fill out a tax return four times a year received more than 100,000 signatures on parliament's petition website in less than a month, and was then debated in parliament earlier this year – even though HMRC argued that the new proposals would not be the equivalent of filling out four tax returns.