HMRC adds 565 civil servants with ‘skills in short supply’ after dissolution of in-house IT provider RCDTS

Almost three quarters of former tech company’s employees have formally joined tax agency – with the rest joining Fujitsu and BT – in a move department claims will boost its technical capability

The dissolution of HM Revenue and Customs’ in-house IT provider enabled the tax department to add more than 500 digital expert staff to its roster who “bring skills that are in short supply in the marketplace”, PublicTechnology can reveal.

RCDTS Ltd, which was closed down at the end of the 2022/23 year, previously operated as a company wholly owned by its sole customer: HMRC. The firm – whose staff were commercial employees, not civil servants – was created in 2015 as the department began the process of extricating itself from the massive long-term outsourcing agreements which had previously defined and dominated its IT landscape.

HMRC last year announced its intention to shutter the firm, as part of a plan to “take more control of its IT strategy and estate”. The department claimed at the time that the closure would not result in any redundancies, with staff either transferring into the department’s workforce or to a third-party provider, under TUPE regulations.

PublicTechnology understands that, following the conclusion of this process – which included an open employee consultation exercise – an additional 565 people have now joined HMRC and become civil servants. This equates to about 72% of the 787 permanent staff that worked for RCDTS during its final year in operations, according to the company’s newly published 2022/23 accounts.

The annual report adds that those employees that did not join HMRC – totalling 222 people – moved to either Fujitsu or BT. The Fujitsu transfer, which included staff providing an IT helpdesk, took place on 26 September 2022, while a network services contract saw the affected employees join BT on 1 March 2023.

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In between which, the formal transfer of the rest of RCDTS’s workforce to HMRC took place on 1 December.

An HMRC spokesperson said: “We’ve enhanced our in-house technical capability by transferring RCTDS employees into HMRC. They bring skills that are in short supply in the marketplace and will help us build even better digital services for customers. We’re focused on building the IT function we services from a more diverse range of partners.”

The accounts reveal that, as staff transferred out of the firm ahead of its closure, the value of the services delivering by RCDTS declined from £85.2m in 2021/22 to £68.1m in 2022/23.

Increase in outages
The report also reveals that HMRC suffered a big increase in IT outages during the year, with one in three days affected by a significant incident.

This includes 31 “red days” – a classification applied to any day on “which there is a high-priority incident of the highest level and in which there are significant outages impacting HMRC and/or customers”. This compares with just 15 red days recorded during the prior year.

Amber days – which include those with “one or more high-priority incidents, with lesser impact” – also more than doubled, from 40 to 87.

The remaining 247 days were classified green – meaning there were no major tech incidents. This figure fell by more than 60 from the 310 logged as completely outage-free in 2021/22.

The 2022/23 year included a major incident that caused five days of telephone and online service outages, during which about 100,000 calls went unanswered.

It is understood that HMRC hopes that moving an increasing amount of systems and services to a hyperscale cloud environment – such as Amazon Web Services – will increase the resilience of online platforms and enable them to better cope with big spikes in demand. The department is also working to reduce its legacy IT estate and revamp its commercial landscape which, during the 2023 fiscal year, saw the organisation’s five biggest tech contracts into 30 smaller deals intended to provide greater flexibility.

In response to PublicTechnlogy’s enquiry concerning the rise in outages, an HMRC spokesperson added: “We run a 24/7 operation across a large IT estate with well-developed systems and processes to monitor and respond to incidents. Security and privacy are at the heart of our work, and we are continuously strengthening and modernising our IT estate.”

Sam Trendall

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