Under the agreement reached with incumbent main contractors Capgemini and Fujitsu, HMRC will switch from a single, overarching IT contract to a series of smaller, more flexible contracts. 

Starting next month, HMRC will be going to market for a number of IT services.

HMRC says the move will allow it to take advantage of emerging technologies such as open-source software and cloud services. The department expects to save around 24% (£200m) a year by 2020-21 on the provision of like-for-like IT services, against a £854m total IT spend in 2014-15.

At the 2015 spending review HMRC was given an additional £1.3bn over five years to be invested in its ‘making tax digital’ transformation programme which will see the majority of individuals and businesses manage their tax affairs online via personal digital accounts.

In the run-up to the changes, HMRC is bringing some existing IT services and staff in-house before the end of the Aspire  contract in order to  provide stability during the phased exit.

Lin Homer, HMRC’s chief executive, said: ‘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.

‘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.’

The move comes as HMRC moves into a major IT development stage for the new making tax digital strategy to move all tax services online with the introduction of personal digital tax accounts for all individual taxpayers, albeit not as yet mandatory, and the phased introduction of digital tax accounts for businesses from 2018, including a requirement for quarterly reporting, the details of which are still being thrashed out between the tax authority, businesses, tax advisers and professional institutes and accounting firms.