UK Cabinet Office takes £7.8M hit to kill off recruitment system

The UK Cabinet Office has cancelled its recruitment platform, resulting in a £7.8 million loss, and faces a possible £8.9 million penalty for its handling of contractors' tax status. The Civil Service Jobs Applicant Tracking System (ATS) Programme, aimed at creating a unified hiring system across departments, was discontinued to align with the Shared Services for Government Strategy.

A National Audit Office report from March highlighted the ATS as an example of an interdependency not properly managed within the strategy. Despite concerns from shared services clusters about the program's lack of adoption and preference for their own ERP systems, the Cabinet Office delayed assessing the need for a reset, complicating the evaluation of alternative solutions.

The project was reset in October 2025, with estimated costs ranging from £26 million to £38 million. The Cabinet Office has a £38.5 million liability for unpaid tax and National Insurance under IR35 off-payroll working rules, with £15 million paid toward a settlement in February 2026, leaving a £23.5 million provision at year-end.

The department also disclosed potential HMRC penalties of up to £8.9 million, though payment seems unlikely as penalties can be suspended under compliance conditions. IR35 tax compliance firm IR35 Shield noted that HMRC's assessment raises serious questions about the government's compliance, emphasizing the need for robust processes and accurate information in IR35 determinations.