Taxman to save £110m by taking an axe to its IT estate

The taxman will cut £110m from its annual IT bill by trimming its IT infrastructure.

HM Revenue and Customs (HMRC) will reduce the £840m it currently spends on IT each year by ditching or shrinking the size of 40 computer systems and shutting down a number of datacentres.

HMRC inherited a large number of systems after it was created from the merger of the Inland Revenue and Her Majesty's Custom and Excise in 2005, leaving it with duplicate systems performing the same role.

Last June the former chairman of PricewaterhouseCoopers Kieran Poynter criticised HMRC for the fragmented nature of its then 650 computer systems in his report into the department's loss of 25 million child benefit records in 2007.

HM Revenue and Customs is simplifying its web of computer systems
(Photo credit: HMRC)

The work will be carried out by outsourcing provider Capgemini under its Aspire (Acquiring Strategic Partners for the Inland Revenue) contract to provide IT services and supplies to the HMRC until 2017.

The HMRC's contract with Capgemini, and subcontractors Fujitsu and Accenture, is one of the UK's largest outsourcing deals and accounts for £750m of the department's annual IT budget.

A spokesman for the HMRC said: "Because HMRC came out of two departments we have legacy systems that are performing duplicate functions and where this is the case this is about bringing these together so there is only one system.

"The savings will be met through a combination of price reductions and simplifying our IT estate. Among other things this includes decommissioning or resizing around 40 systems."

These savings will be realised from 2011 and will be in addition to the £70m that the HMRC cut from its annual spend on the Aspire contract in 2007.