The UK’s tax authority, HMRC, says its controversial decision to spend up to £4.4 billion ($5.8 billion) on a new CRM system from Salesforce is justified, because building its own software platform would be too expensive, complex and slow.
HMRC on Friday October 30 quietly published a summary business case for the decision to go all-in with Salesforce SaaS – saying it considered six options, including “do nothing” and a “best-of-breed” integration of various off-the-shelf systems.
It rejected the latter idea due to “high integration complexity and coordination risk.” And it dismissed the idea of developing a "bespoke HMRC customer management solution" due to "delivery complexity, cost and timescale risk."
That’s despite the argument that frontier model capabilities are “fundamentally shifting the economics of modernization” due to their growing ability to extract the business logic and flows of legacy technologies – something that is going to have to be mapped anyway in the migration from 70+ legacy systems to Salesforce.
HMRC published details of its sprawling contract with Salesforce on 15 October. It described it as spanning procurement of Salesforce’s Agentforce, Data Cloud, Informatica, and Experience Cloud and put the figure at up to £2.4 billion. (That’s over quadruple the £500 million allocated to the UK’s Sovereign AI Fund.)
Its newly published business case does not name Salesforce. But it cites “CRM Software as a Service platform, implementation and transformation costs, with estimated whole lifecycle costs (15 years) in the range of c.£1.7bn to £4.4bn (incl. optimism bias and VAT), reflecting the scale, complexity, and delivery over 15 years.”
HMRC added: “Spend will be committed incrementally, including built-in review mechanisms at key points across the lifecycle to ensure cost is controlled…”
HMRC says the new CRM system will serve 34 million citizens, five million businesses, and create a “generational shift in the way HMRC supports its customers” by replacing 70+ legacy customer management systems into a single CRM platform.
Salesforce last month said that it will "unify legacy systems onto a single secure platform, delivering a 360-degree view of taxpayer interactions to enable faster, first-contact query resolution. The platform will equip HMRC teams with real-time taxpayer insights, automated workflows, and AI-assisted tools that significantly reduce manual workloads."
See also: AWS wins controversial £473m hyperscaler-only HMRC contract
HMRC expects to drive efficienciesof £815 million over a decade by joining up customer data. HMRC also said it expects to deliver cost savings of £924 million to £1.25 billion over its total over the 15-year contract length (albeit with a massive 40% “optimism bias”) by moving to a “unified customer engagement domain.”
The decision to build the entire nation’s tax collection systems on a US software providers’ SaaS comes weeks after the government told the Science and Technology Committee (in response to its June 2026 “Rewiring The State” report) that it expects “public sector organisations to make proportionate, risk-based decisions that reduce overdependencies, strengthen resilience and deliver secure, value-for-money outcomes while maintaining access to the best technologies” available globally.
Writing to the select committee on September 7, the government said that “the First Secretary of State and the Chancellor have written to their Ministerial colleagues, expressing the need to use procurement to support UK start-ups and scale-ups” and said work was underway to improve the digital capabilities of the civil service.
The government meanwhile continues to contract large outsourcers to deliver failing projects like the civil service pension scheme, which is being run by Capita.
In November 2025, a senior British government minister was told by the CEO of outsourcer Capita that with the company’s help “the UK Government would be presiding over the largest AI-enabled pension in the UK… a flagship use case.”
The company is persistently missing agreed service levels and after having won the tender, Capita’s CEO Adolfo Hernandez then admitted to MPs in July that that the pension scheme is “very complex; more complex than we thought, realistically.”
The UK’s Paymaster General, Nick Thomas-Symonds told MPs over the summer that his team was exploring “the long-term feasibility of a full in-house delivery model” for that service – but claimed it would “need a quite enormous state architecture.”
