HM Revenues & Customs has much progress to make before it ends its multi-million Aspire contract, according to a report from the National Audit Office.

The report, which will feed into the Public Accounts Committee’s latest investigation into the transfer of the contract, was published on 9 June. It is intended as a factual update, and so the NAO does not draw any conclusions.

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It does, however, set out the risks HMRC faces and the steps that are still to be taken in replacing the contract, which was signed with Capgemini in 2004 – a time when long-term, high-cost contracts with a single supplier were commonplace.

Such contracts have since fallen out of favour with government, and HMRC has been working to replace it since 2012, although in 2015 it came under fire for its initial slow progress.

The replacement involved splitting up the contract into a series of smaller deals, and it later announced that it would be tendering for these deals would begin in April 2016.

The NAO report also says that HMRC is expected to announce how it will exit from the services provided by the third biggest supplier, Accenture, this month.

In terms of next steps, the NAO notes that the actions HMRC has taken will lead to a different model of IT provision.

However, HMRC still has to determine the IT model it will adopt from 2020, when all Aspire contract elements will have been replaced, and by which time it is expected to provide a fully digital tax system.

In addition, HMRC needs to build suitable commercial and IT capability and capacity, and closing the IT skills gap in its own staff, some of which were transferred from the contractors during the early stages of the contract transfer,

The NAO says that HMRC has adopted a number of the recommendations set out by the Public Accounts Committee in 2015, including to ensure operational continuity and replace Aspire in a slower, step-wise fashion.

In 2014, the Cabinet Office moved to encourage innovation and cut costs by setting strict new rules on IT contracting, which included a ban on single IT deals over £100m and prevented any single supplier from providing both services and systems integration to the same area of government.