Legacy tech is the gift that keeps billing for UK's tax collector

£5.2B more thrown at the never-ending quest to modernize HMRC

In 2022, the UK's tax collector put £4.5 billion ($5.9 billion) on the table to help its applications become "less dependent upon legacy technologies." The extent to which His Majesty's Revenue & Customs (HMRC) achieved that goal is debatable, but there is no doubt it intends to spend up to £5.2 billion ($6.9 billion) more to continue the job.

The Crown Commercial Services, which sits within the Cabinet Office, is heading up the procurement for Digital and Legacy Application Services 2 (DALAS), according to a new breed of announcement called a pipeline notice, which came into play when the UK Procurement Act 2023 came into force on February 24, 2025.

Other than the contract value of up to £5.2 billion, it offers scant further detail.

Nonetheless, the Cabinet Office published a spreadsheet in October last year that sheds more light on the matter. It reveals that DALAS 2 is in fact a framework agreement due to replace DALAS.

In 2022, the UK government's commercial wing began setting up a contracting agreement for application software services supporting HMRC.

At the time, a procurement notice said the contract would be in place for four years, beginning from July 2023, with a maximum of £1.125 billion ($1.5 billion) spent under the deal in each financial year.

"The framework will provide a commercial vehicle to replace existing contractual arrangements that are due to expire between September 2023 and January 2025, and will provide the basis for letting a large proportion of HMRC future application services requirements," it stated.

The framework deal – under which buyers get indicative prices while sellers get a nominal volume – is intended to "provide a strategic gateway to support the delivery of future application services and move HMRC toward an application services support model that is less dependent upon legacy technologies."

HMRC has one of the largest and most complex IT estates in Europe with more than 600 systems, 800 terabytes of data, 1,000 IT changes a month, and a 24/7 IT operation. It serves 45 million citizens and more than 5 million business taxpayers.

Since 2022, a succession of suppliers have won work under DALAS. In May last year, consultancy Capgemini was awarded a contract worth up to £245.5 million ($326 million) to keep legacy systems up and running. It was one of a tranche of suppliers named on phase one of the deal. Accenture, CGI, Equal Experts, IBM, Cognizant, Coforge, Ernst & Young, Mercator, QA, TSI, and Netcompany were among the others.

The current framework agreement for making deals under DALAS ends in July 2027, although the contracts formed under it can go on for longer.

Nonetheless, it seems that, in the case of HMRC and the tech supply market, legacy technology is the gift that keeps giving. The competition to be part of DALAS 2 is set to start in October 2026, while the framework itself is set to be in place from April 2027 to April 2031. ®