HMRC to mothball in-house tech firmby
HMRC has announced the closure of its in-house IT provider RCDTS Ltd to allow it to “take more control” of its IT strategy and estate.
HMRC said it planned to close down Revenue and Customs Digital Technology Services (RCDTS) Ltd by the end of the 2022/23 fiscal year in 14 months’ time.
A spokesperson told AccountingWEB: “To support improved services for all our customers, HMRC is taking more control of its IT strategy and estate, ensuring we have the right capabilities in house, supplemented by buying in standardised IT services from a more diverse range of partners.”
The move is part of the Revenue’s Technology Sourcing Programme, under which HMRC plans to manage exits from several major IT supplier contracts, overhaul its procurement, reduce risk in the IT estate and provide more flexibility for the future.
The programme also aims to develop a new supply chain model for a technology spend of around £900m each year. It also plans to work with a greater range of providers, including more small firms.
Since its formation in 2015, not-for-profit company RCDTS, which counts HMRC as its only customer, has been tasked with helping the tax department extricate itself from major long-term outsourced IT contracts, or “supporting HMRC’s IT transformation in the efficient delivery of managed information technology services,” in its own words.
The move is similar to the 2020 decision by the Department for Work and Pensions to merge its BPDTS tech services company with its DWP Digital function to create a “simpler and stronger digital offering”.
Covid and Brexit contributions
According to its latest annual report and accounts, as of March 2021, the company had 786 full-time employees and 163 contractors on the books, with a total headcount of 949.
The RCDTS annual report shows HMRC spent £80.9m on the delivery of services provided by the firm, representing an increase of £9m compared with the previous year, reflecting the additional workload placed on the department by the government’s response to coronavirus and the ongoing demands of Brexit.
The firm provided support in the validation of claims for the Self Employment Income Support Scheme, Statutory Sick Pay Rebate Scheme and provided IT infrastructure to support the Eat Out to Help Out Scheme.
It also contributed to the delivery of numerous systems to support transition work following the UK's exit from the European Union (EU), to manage compliance activities for the Customs Declaration Service, as well as a new solution called Safety and Security GB to handle exceptions for high-risk goods imported into the UK.
No planned redundancies
As part of the closurere no redundancies are planned, with employees of the government-owned company either transferred into HMRC to become civil servants or to an external commercial provider under TUPE regulations.
HMRC said it is “committed to full and open consultation with colleagues and all affected parties, as well as supporting our people through any potential change”. Once the moves are complete, the tax authority plans to close the company by March 2023.
Fix and defend
Spending with technology companies by central government rose to £4.4bn in 2020, according to a Tussell report - up from £4.2bn in 2019.
The report stated that HMRC appeared to be “more reliant on its top IT supplier” than other departments, having spent £1.9bn with Capgemini between 2016-2020, following on from the company’s involvement in the long-running and costly Aspire contract.
In the November 2021 three-year spending review, HMRC received £277m to support its work to transform IT procurement over the next three years, with a further £468m deployed to help the Revenue “reduce the risk of system failures, enhance the department’s ability to defend against cyberattacks, and support the continued digitisation and modernisation of the tax system”.
The one-year spending review of 2020 [section 5.9] also awarded HMRC new funding of £268m to “fix outdated government IT” and ensure “core systems are secure and can support better administration.”