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PAC concern over HMRC’s IT contract

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The Public Accounts Committee has expressed its doubt over HMRC’s management and replacement of the Aspire technology contract, which is coming to an end in 2017. Conservative MP Richard Bacon said: ‘The Aspire contract between HMRC and Capgemini is the government’s largest technology contract, which has cost some £7.9bn over the last ten years and generated profits for the suppliers of some £1.2bn, while enabling the collection each year of the government’s tax revenue, amounting to over £500bn in 2013-2014. HMRC faces an enormous challenge in moving to a new contracting model by 2017, with many short-duration contracts with multiple suppliers, and appears complacent given the scale of the transformation required. Moreover, HMRC’s record in managing IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.’

Bacon continued: ‘The Aspire contract has provided stable systems to support the collection of taxes. The provision of all government services depends on the continued stability of tax collection, which yielded more than £500bn in the last completed financial year and, on the same trend, would be expected to yield around £5trn over the next ten years. There are substantial risks to tax collection if the transition fails, which would create havoc with the public finances.

‘It is surprising that HMRC is still unable to assess properly the value and risks attached to a long-term contract such as Aspire and is therefore unable to evaluate this approach against newer government approaches to limit the value, length and structure of ICT contracts. Although HMRC decided three years ago to move in principle to a new contracting model, it still does not have a detailed business case for the change. HMRC says it hopes to publish the business case in the spring, which will leave only two years to engage the market, recruit the skills, and procure and manage the transition of the services it will need before the existing contract expires in 2017. HMRC expects the new arrangements to reduce its running costs by 25%. However, [they] still cannot estimate the cost of this change, in terms of moving staff, equipment and office space; it could not even provide the PAC with a range.

‘HMRC and the Cabinet Office should jointly agree key milestones and warning flags leading up to the end of the contract in June 2017, with contingency plans that manage the risks to the stability of the tax collection system and the risks to value for money should these milestones be missed.’

In response, an HMRC spokesperson told Tax Journal: ‘We are making significant progress in preparing for a smooth and effective transition from the Aspire contract, which will give HMRC control over the development and delivery of digital services and enable us to make efficiencies of up to 25% by 2021. We have already opened one new HMRC digital delivery centre in Newcastle, and have plans for others to increase our in-house digital capability, and in December we agreed an amendment to Aspire which allows us to contract services directly with major IT suppliers.

‘The rapid development of new digital services will improve the experience of customers when they need to deal with us, making it easier for them to meet their tax and entitlements obligations, while ensuring that HMRC can fully exploit advances in digital technology to tackle tax fraud, error, evasion and avoidance.’