UK tax collector plans £2B tech binge as legacy systems refuse to die

Summary

HMRC is lining up more than £2 billion of technology procurements across the next couple of years as it looks to modernise ageing systems. The biggest items in the procurement pipeline include a £410m legacy data warehouse transformation, a £350m AWS public cloud compute deal, and multiple large contracts for run-and-change IT services, workplace and mobility, and data-centre services. Several planned awards are described as direct or uncontested replacements of existing suppliers, with Capgemini and AWS prominent in the pipeline and SAP already winning large ERP-related awards.

The pipeline follows additional funding for HMRC’s IT modernisation announced in last year’s Spending Review and comes after NAO criticism that HMRC is taking longer and spending more than expected to exit legacy systems.

Key Points

HMRC’s procurement pipeline totals over £2bn, with major lots planned over the next two years.
Top planned procurements: Legacy Data Warehouse transformation (£410m), AWS Public Cloud Compute (£350m), Digital Platforms Run & Change Products (£306m).
Several large awards are likely to be direct or uncontested replacements, raising questions about competition — Capgemini and SAP have already secured big deals.
Other sizable contracts include Mobility & Workplace services (£250m), Digital Platforms Run & Change Platforms (£250m), and Data Centre Services (£220m).
HMRC spent £1.16bn on IT and telecoms in 2024–25 and received an extra £1.6bn for 2026–27 to 2028–29 to modernise IT and data infrastructure.
The National Audit Office warns HMRC is slower and costlier than expected in moving off legacy systems and has not realised anticipated efficiencies yet.

Content summary

HMRC’s published procurement spreadsheet reveals a prioritised programme of large-scale IT deals intended to replace and support legacy platforms. The programme’s largest single item is a planned single contract to transform legacy data warehouses (likely replacing SAP ECC Business Warehouse components), estimated at £410m.

AWS is listed for a £350m public cloud compute contract to replace an existing AWS arrangement. A separate £306m procurement covers digital platforms run-and-change services — a role previously held by Accenture. Several contracts are flagged as “direct awards” intended to replace existing support arrangements, including a £214m Legacy – Retained HMRC Services Contract that looks likely to follow prior Capgemini direct awards and extensions.

The procurement push follows a government-led Zero-Based Review and extra funding intended to modernise HMRC’s IT estate. However, the NAO has recently reported HMRC’s migration from legacy systems is slower and more expensive than planned, with expected efficiencies still unrealised.

Context and relevance

This matters because it shows where public-sector IT spend is concentrated and which major suppliers are poised to benefit. The mix of large direct awards and re-buys suggests continuity of incumbent vendors (notably Capgemini, AWS and SAP) rather than broadening the supplier base. For suppliers, policy watchers and taxpayers, the pipeline flags potential market opportunities, procurement scrutiny points, and ongoing risks around delivery and value for money.

Why should I read this?

Short answer: because it’s about billions of pounds of tech spending and whether HMRC can actually escape its creaky old systems. If you work in public-sector IT, sell into government, or care how taxpayer cash is used, this gives a quick map of who’s likely to win work, where the money’s going, and why watchdogs are getting twitchy. We’ve skimmed the procurement sheet so you don’t have to.

Source

Source: https://go.theregister.com/feed/www.theregister.com/2026/01/28/hmrc_tech_pipeline/