Annual report outlines efforts to open up procurement to more providers, to support objective to ‘have fewer technologies providing our IT platforms, so we can scale them up more easily’
HM Revenue and Customs has pegged its annual spending on contracts with IT suppliers at over £1bn, as it plans to continue moving away from “legacy service integrators” and embracing smaller and more innovative providers.
In its annual report and accounts for the year that ended on 31 March 2025, the department indicates that it currently has “several major contracts that are significant in ensuring that it can deliver its core services” – a key element of deals with tech providers.
“Our IT services are supported through contracts with suppliers valued approximately at £1.6 billion in total, each year,” the report adds. “HMRC continues to deliver better value from using well-established performance measures and competing work on a regular basis using a variety of different routes to market.”
A significant means through which the department is exploring these new approaches is the £3bn Digital and Legacy Application Services (DALAS) framework put in place in 2023. This buying vehicle – which was designed jointly by the tax agency working and the Crown Commercial Service – was designed to “provide a strategic gateway to support the delivery of future application services and move HMRC toward an application services support model that is less dependent upon legacy technologies”, according to procurement documents published at the time.
A total of more than £1bn has already been spent via DALAS, and a second iteration – with an estimated value of £6.24bn – is already in the works.
HMRC’s FY25 report says: “DALAS facilitates the transition away from legacy service integrators by offering a structured, multi-lot approach that encourages competition, innovation and small and medium enterprises’ participation. Our digital transformation continues which will facilitate a move to lower-cost and highly resilient cloud data-storage services.”
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Later in the document, the department adds that “continually modernising and updating our infrastructure, and ensuring it remains fit for purpose, is essential to meeting the evolving needs of customers and keeping their data secure”.
In the course of this work, by the end of 2024/25 HMRC had “reviewed 82 HMRC systems or warehouses, deleting around 150 billion rows of data”.
In comments published in the report, the department’s chief digital and information officer Daljit Rehal said that modernisation efforts will continue – and will ultimately provide taxpayers with better services. These efforts will also see the organisation streamline its tech infrastructure so as to rely on a smaller range of tech offerings and providers.
“HMRC will deliver more of what our customers need through quick and straightforward digital channels, improving their experience and making it easier to get their tax right, first time,” he said. “To help us do this we’re modernising our systems, streamlining our IT governance, and working in more agile ways to deliver the outcomes HMRC needs sooner. We’ve already moved many of our services to cloud hosting and we remain fully committed to exiting our legacy datacentres as we build a modern IT estate. We’ll have fewer technologies providing our IT platforms, so that we can scale them up more easily and cost-efficiently. Those platforms will enable us to build the IT products our customers and colleagues need, in ways that enable us to change services much faster in future. They will be well-supported and properly governed, with our IT experts working to industry best practice and standards.”
