HMRC approach to IT maintenance could leave tax system in ‘havoc’

TAXPAYERS and the administration of the tax system could be left in “havoc” owing to a complacent approach to HM Revenue & Customs‘ IT maintenance, the Public Accounts Committee claims.

In its 30th report of session, the committee found the tax authority “demonstrates little appreciation of the scale of the challenge it faces” in replacing its Aspire contract for maintaining its hardware and software by 2017.

And while the current arrangement has provided “stability” over the last ten years HMRC has not managed the costs of the contract well, the PAC, chaired by Labour MP Margaret Hodge (pictured), said. Thus far, the contract has cost around £7.9bn, generating £1.2bn profit for the supplier.

HMRC has made “little progress” in defining its needs and has yet to present its business case to the government. However, it appears it intends to move from the current single contract to a new model with many short-duration contracts with multiple suppliers, in accordance with current government procurement policy.

Once funding is agreed, it will have just two years to recruit the skills and procure the services it will need.

“HMRC’s record in managing the Aspire contract and other 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,” the committee said in its findings.

The report identified problems with a previous move to centralise HMRC’s PAYE and national insurance databases had resulted in nearly £1bn of tax being foregone.

“HMRC is aware of the risks involved in replacing the Aspire contract but it has not quantified them,” the MPs said.

“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 although this was originally expected before July 2014.”

An HMRC spokesman said: “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.”

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