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HMRC aims to improve customer service with £1.5bn IT investment

The department is on the hunt for customer relationship management system and contact centre as a service suppliers, following criticism of its customer service

Lis Evenstad
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Published: 03 Jun 2025 11:45

HM Revenue and Customs (HMRC) aims to spend big on customer service, hoping to move to a modern technology platform to improve customer support.

The department went out to tender for a customer relationship management (CRM) system in April 2025, worth up to £1bn excluding VAT, as well as a contact centre as a service (CCaS) provider, with an estimated contract value of £500m.

This is part of HMRC’s enterprise CRM programme, aiming to transform the way it interacts with customers as its Making Tax Digital (MTD) programme continues to evolve.

The programme was launched in 2015, billed as HMRC’s holy grail that would digitise the UK tax system by 2020, and hailed by then chancellor George Osborne as “the end of the tax return”.

The scheme was introduced as a way of making it easier to file tax returns, helping businesses and individuals reduce errors leading to tax overpayment or underpayment, and reducing tax evasion.

However, a National Audit Office (NAO) report published in May 2024 found the move to digital services had failed to have the effect the department was hoping for, and did not ease pressure on traditional services, such as telephone and post.

Previous criticisms

The NAO report criticised the department for pressing on with trying to reduce costs despite its poor performance, and said it had been unable to cope with the demand on phone calls.

The report added that part of the problem is that while the digital services worked well for straightforward transactions, “it is not clear how much digital services are offering a like-for-like replacement to traditional channels for many issues. Gaps remain in what individuals can do online.”

The department’s customer relationship management programme is aiming to change this, and create a “360 [degree] view of the customer, rationalise its technology estate and put it in the best position to leverage all the opportunities of industry-leading capabilities and AI tools”, according to the CRM tender document.

An HMRC spokesperson told Computer Weekly that implementing a “single, modern technology platform for our customer contact channels will help us continue to transform how we operate, provide a more seamless experience for our customers, and develop a more resilient and efficient service”.

The £1bn tender is likely to include core CRM software, identity, verification and access software as a service, fraud prevention mechanisms, secure digital exchange and communication software and architecture and product technical support.

The contract for the CRM system is estimated to go live in February 2026 for 10 years, with the option to extend for a further five years.

The CRM system will be required to integrate with updated customer service platforms, including the contact centre HMRC is also procuring. The CCaS will, according to HMRC, allow the department to manage customer interactions across multiple channels, including phone, email, chat and social media.

Read more about HMRC and technology

  • Making Tax Digital is meant to overhaul the UK tax system, make it easier for businesses to file tax returns, and reduce error and fraud. How successful has the programme been? Computer Weekly looks at the details of tax digitisation.
  • Beyond £785m spend, HMRC also spent £482m on upgrading legacy systems and introducing new digital systems, as it continues to fall behind its plans to become one of the most digitally advanced tax authorities in the world.
  • HMRC looking for a supplier to support its planned exit from three Fujitsu datacentre contracts.

The department undertook informal market engagement in early April, prior to going out to tender, and has encouraged IT suppliers to engage with the tender, billing it as an opportunity to transform digital tax services.

HMRC has continually faced increasing costs and challenges as part of its MTD programme, not just due to the delays.

The latest NAO report into the tax system, published in February 2025, found that HMRC spent £785m on running its digital tax systems in 2023-24, accounting for an 18% cost increase in real terms from 2019-20.

It also spent £482m on developing new systems and upgrading legacy systems, some of which are 30 years old, according to the report.

Commenting on the report in February, Public Accounts Committee chair Geoffrey Clifton-Brown called on HMTC to take the need to consider the financial burden on taxpayers seriously, and improve efficiency and productivity.

“The costs of running the tax system are rising as the system has become increasingly complex and burdensome, and more people are having to pay tax as a result of frozen tax bands,” he said. “Despite the promises of new digital systems, these programmes are overrunning, over budget and failing to cut HMRC’s running costs. At the same time, public trust in HMRC is being eroded as taxpayers find it difficult to deal with HMRC. Continual failings in customer service cause frustration and heap additional costs onto taxpayers.”

The department continues to be committed to improving digital services and making tax administration simpler.

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