HMRC dangles £500M carrot for National Insurance system revamp

The UK government is offering up to £500 million in funding for suppliers to develop a new national insurance system, according to HM Revenue & Customs (HMRC). The tax authority has issued a call for suppliers to bid on the procurement to maintain and update the National Insurance and PAYE System (NPS). The revised contract, potentially lasting up to seven years, aims to address the current limitations of the system, which operates on outdated technology lacking modularity and scalability.

HMRC's long-term goal is to transition towards a more agile, service-oriented architecture capable of supporting strategic objectives for Income Tax and National Insurance Contributions (NICs) administration, including real-time processing. The investment would enable HMRC to access adaptable and resilient support services to adapt to evolving policies, customer needs, and technological advancements.

HMRC plans to hold a supplier market engagement event to provide an overview of the requirements, procurement approach, and timelines, followed by a tender notice in September, with implementation commencing in June 2027. In January of the previous year, HMRC awarded an additional £35.2 million to Accenture without competition on a £70.4 million contract to manage the NPS system, which is a critical component of the UK's national infrastructure, responsible for collecting 40% of revenues with nearly 40,000 users in HMRC and the Department for Work and Pensions.

The current system was introduced in 2009, when tech services integrator Accenture provided application development and support services for the £10 billion Aspire contract, which also included Capgemini, Fujitsu, and BT.