The taxman's plans to shutter large numbers of local office will now save less than half the amount originally forecast by 2025.
HM Revenue and Customs is closing all of its 170 offices in a migration to 17 sites, as well as a London headquarters.
The plan had been expected to generate savings of £499 by 2025/26, but a report from the National Audit Office has revealed that forecast has now been slashed by more than half.
It is now estimated the move will see HMRC save £212m over the same period.
Similarly, estimates for estate costs over the next ten years have risen by nearly 22 per cent, or £600m.
The shifting figures are blamed on delays the process, although HMRC remains confident that by 2025 total running costs will be £83m, or 31 per cent, lower than at present.
Amyas Morse, head of the National Audit Office, said: “HMRC has acknowledged its original plan for regional centres was unrealistic and is now re-considering the scope and timing of the programme.
“It should step back and consider whether this strategy still best supports its wider business transformation and will deliver the sustainable cost savings it set out to achieve in the long run.”
Lib Dem treasury spokeswoman Susan Kramer described the report as “a damning verdict” on the HMRC.
Kramer added: “How can the public have confidence in our tax system when the organisation charged with bringing in money it so utterly reckless with how it spends it? HMRC refused to listen when people warned of the dangers of rushing to regional centres.”