HMRC to end £10bn Aspire IT contract early and start tendering for new contracts next month

Organisation claims it could save £200m a year - but not until 2020-21

HMRC has reached a final agreement with its major IT suppliers Capgemini and Fujitsu to bring its lumbering £10bn Aspire contract to an earlier than expected close.

The contract, which was due to end in 2017, will now be phased out ahead of this deadline and be turned into a series of smaller, more flexible contracts with both new and existing suppliers.

Tendering for these contracts will begin next month and HRMC said it would look to work with SMEs where possible. HMRC also said it would bring some IT services and staff in-house during the closure of the contract, as was expected.

The organisation said that by ending the contract earlier and being more flexible in its IT use it could save £200m a year, but only from 2020-21.

HMRC chief executive Lin Homer said that ending the Aspire contract early would ensure the organisation was better placed to take advantage of digital technologies to improve its services to the public.

"HMRC's ambition is to be one of the most digitally-advanced tax authorities in the world, and the agreement we have reached to exit the Aspire contract brings that a huge step closer," she said.

"Our new approach enables HMRC to secure the adaptable, cutting-edge IT services we need to transform our services to customers and modernise the way we work, at much better value for money for the taxpayer."

These plans include spending £1.3bn over the next five years to speed up its transformation programme, which is intended to make it easier for individuals and business to organise their tax issues online. This money was stumped up in the 2015 Spending Review, rather than coming from HMRC's current budget.

The Aspire contract is an example of one of the numerous 'blockbuster' IT deals that the public sector has been partial to, but which subsequently ran into numerous issues, not least because of their size and complexity, and the challenges of managing such relationships.