UK tax collector puts half a billion on table for call center services The UK's tax collector has confirmed plans to contract out call center services with an associated price tag of £500 million ($677 million). In a "planned procurement notice" published last week, His Majesty's Revenue and Customs said the deal, expected to be awarded in December, would create a "contact center as a service ( …
This is economically brain-dead.
We’ve seen this story before: flashy outsourcing deals sold as “innovation” or “transformation” often end up locked into expensive contracts, plagued by shifting scopes, hidden costs, and vendor dependence. Once the private supplier is entrenched, they hold the leverage - and taxpayers foot the bill for every extra change or fix.
Meanwhile, in-house expertise is hollowed out. The public sector becomes dependent on external firms not just for services, but for understanding its own systems. This creates long-term fragility: the state loses control over critical infrastructure and sensitive data, while the supposed “efficiency” gains evaporate into profit margins.
The very idea should be scrutinised. Why outsource core government functions when the evidence so often shows ballooning costs, delivery delays, and underperformance? Especially when you’re dealing with tax data - the crown jewels of citizen information - handing it to private firms (who may themselves be engaged in tax fiddles) is a glaring risk.
It’s easier, politically, to sign big, shiny contracts than to do the hard, unglamorous work of reforming internal operations. But taxpayers will be paying for this failure twice: once through the contract, and again when the system underdelivers.
@elsergiovolador
"Why outsource core government functions when the evidence so often shows ballooning costs, delivery delays, and underperformance?"
The argument can be to fight ballooning costs, delivery delays, and underperformance. This isnt an argument for either distribution but to identify the problem exists on both sides. For example Labour have just been handing out pay rises like money is going out of fashion because unions demand so. They demand so because labour solution to train strikes was to give them a load of money to go back to work. And once you cave to one the others see weakness and so more demands.
But where is this extra money to do so? We have a huge covid bill to pay already and the national debt incurs a good amount of interest. This is at a time when the gov is hammering growth and jobs by taxing too much already and needing more.
"It’s easier, politically, to sign big, shiny contracts than to do the hard, unglamorous work of reforming internal operations"
Such is the curse of government. It is worth more to them to look good to get votes than to maintain and manage what already exists. Its a difficult one.
You’re right the government faces tough fiscal constraints - but let’s stay focused. Outsourcing doesn’t solve those constraints - it adds to them. Why? Because you’re taking an already underfunded public service and baking in extra costs: contractor profit, shareholder returns, corporate admin overhead, legal wrangling, plus the long-term cost of losing in-house skills. You’re turning a hard problem into a guaranteed money drain.
Here’s the blunt economic picture: imagine you’re broke and your roof is leaking. Instead of patching it yourself or hiring a local roofer once, you sign a 10-year luxury maintenance contract with a firm that says they decide when and how to fix the roof, and you must pay them a management fee no matter what - even if they never lift a hammer. That’s public-sector outsourcing.
Yes, public pay pressures exist - but public sector wages are pitiful, and basic services like trains, healthcare, and tax collection are the arteries of the economy. If you want growth, you need those arteries clear, not choked by broken infrastructure and outsourced band-aids.
High taxes are a real issue, but bad outsourcing guarantees you pay more for worse. It’s economic stupidity in a suit - it lets politicians pretend they’re solving problems while they shovel public money into private hands, locking in poor results and rising costs. It’s not just inefficient - it’s deliberately rigged to be worse.
@elsergiovolador
"You’re right the government faces tough fiscal constraints - but let’s stay focused. Outsourcing doesn’t solve those constraints - it adds to them. Why? Because you’re taking an already underfunded public service and baking in extra costs: contractor profit, shareholder returns, corporate admin overhead, legal wrangling, plus the long-term cost of losing in-house skills. You’re turning a hard problem into a guaranteed money drain."
That sounds like I was focused since the problem we both identified was funding and the lack of. And while there is money drain on the outsourcing, there is money drain on the in-house that you then say is underfunded public services. They are underfunded while the government spafs increasing amounts of money. Even the claimed austerity was more and more spending (just less than previously planned). In-house or outsourced the government is failing to manage money well.
"Here’s the blunt economic picture: imagine you’re broke and your roof is leaking. Instead of patching it yourself or hiring a local roofer once, you sign a 10-year luxury maintenance contract with a firm that says they decide when and how to fix the roof, and you must pay them a management fee no matter what - even if they never lift a hammer. That’s public-sector outsourcing."
Well identified. The government spends on luxury contracts of dubious worth. And as I also pointed out they are not competent at managing the in-house staff either (you say they are underfunded and I pointed out the huge pay rises unions just got).
"Yes, public pay pressures exist - but public sector wages are pitiful, and basic services like trains, healthcare, and tax collection are the arteries of the economy. If you want growth, you need those arteries clear, not choked by broken infrastructure and outsourced band-aids."
Some public sector wages maybe, others not so. Trains were on strike until the gov spaffed money, health care was given huge unsustainable investment and with more money they cant cope. and now the tax collectors. Maybe the gov isnt focused enough on what it should be doing. Note I am not arguing either way here for in-house or outsourced, I am laying the blame where it belongs. The gov takes our money and spends even more than that.
> (you say they are underfunded and I pointed out the huge pay rises unions just got).
Trouble is the level of underfunding in some sectors is such that even after the huge pay rises, the workers are still massively under paid both in general and when compared to their pre 2010 pay levels…
If you want a vibrant economy, people need to have money to spend on stuff other than the bare essentials… and trickle down has demonstrated it doesn’t produce a functional economy, unless you believe servitude is the peak of human evolution.
@Roland6
"Trouble is the level of underfunding in some sectors is such that even after the huge pay rises, the workers are still massively under paid both in general and when compared to their pre 2010 pay levels…"
Very quick google found even the BBC acknowledges it -https://www.bbc.co.uk/news/55089900
The problem with comparing public wages with previous public wages is it ignores the entire pool of people who can do the job. 2008 being the crash that the private sector felt, and the subsequent low growth that the private sector felt. I dont believe we can detach public workers from that and be realistic.
"If you want a vibrant economy, people need to have money to spend on stuff other than the bare essentials"
Very true, which is why sucking money out of the economy (tax) is bad and why countries struggle and topple when governments become too much of the economy. The very simple fact is often forgotten, public spending comes from the productivity of the private economy. The private workers are the earners, the public spending is spending from that earning. Once that is forgotten there will be no vibrant economy nor people having money to spend on anything but bare essentials, assuming they can get them.
"and trickle down has demonstrated it doesn’t produce a functional economy, unless you believe servitude is the peak of human evolution."
Large government has demonstrated it doesnt produce a functional economy. We have watched them fall and crumble. One amusement about the trickle down comment is that you write that on a computer which you bought with excess cash you could probably easily afford. I remember in the 90's my parents saving to get me a computer. I remember calls being expensive, as was slow internet. I remember the huge battery connected to a handset and thinking how stupid it looks, I could even look that up on my mobile if I wanted to.
In the entire time of the USSR they never managed to increase productivity beyond more inputs. Yet the US boasted innovation growth. Funny you mention servitude, what do you have in mind?
Not only that, nobody's accountable for the failures. Useless minister-of-the-week blames the previous government or the contractor. Crapita, Fushitu, Beardie Trains, Stagecoach and the other thieving troughers blame the government. All the while, zillions of taxpayer money gets spunked up against the wall.
"you sign a 10-year luxury maintenance contract with a firm that says they decide when and how to fix the roof, and you must pay them a management fee no matter what - even if they never lift a hammer. "
You fail to note that the company may decide that the whole roof needs replacing and it would be cheaper to keep putting you off since hiring a blood sucking lawyer and suing them it likely beyond your budget.
“ You fail to note that the company may decide that the whole roof needs replacing and it would be cheaper to keep putting you off since…” it is more profitable to them to patch as and when necessary and not bid for the contract renewal.
Seen this a lot with landlords when it comes to fixing things in student houses. The students report a fault and the landlord tries to charge the students for causing the damage.
Got one currently, where a bulb has blown, but the fitting is non-standard and so a replacement bulb is practically unobtainable, thus landlord is trying to charge the cost of replacing the entire light fitting…
Using the £500m to invest in Tax Officers to clear the backlog and increase the tax take from tax dodgers will pay for itself.
Outsourcing to shysters like this will make no difference - probably make it worse actually.
If it will be wafer thin, and as cheap as possible staff with little understanding and no authority to do anything … once you get past the Chat/AI.
I wrote HMRC a letter to sort something out and their web site said that they expect to process the letter and I shouldn't send another letter or call them again until April 2026 as that's how long it will take to process the letter I sent them in February 2025. This is something I've been trying to sort out for about 3 years - so I'm not surprised with their last response.
I've no idea if outsourcing will be better or worse, but it's pretty dire at the moment.
I know someone in similar situation. Eventually, after not responding HMRC just reached in and took money. It came back when they found out they were dealing with a lawyer and received a legal challenge. Somehow, that letter was read immediately. Unfortunately, few of us can afford or have the expertise to achieve the same result.
We need to focus on something far more important.
If I'm phoning the helpline... you've already failed. It means the tax system isn't clear and obvious, it means that answers cannot be simply found online, and it means that online channels have proved insufficient.
If this happens at precisely one time of the year in excess, too, it means something else is broken: Making everyone file on the same day. It's a nonsense. You could stagger them throughout the year and instantly spread that load across 365 days instead of a handful near tax return time (it's not like that payment is going to happen instantly, it's not like everyone is billed on the same day, etc.).
Someone having to phone HMRC at all means... you failed in the 21st century.
Personally, as a mathematician who was self-employed for nearly 10 years, I avoided everything I could possibly do to make my tax return as simple as possible, precisely because without a qualified and experienced accountant it's impossible to accurately determine whether something is allowed or not, whether there's something else you could claim for or not, where the boundaries lie on any definition, or even what the case law says about exactly what things apply to. I literally took to just putting down my income in one box, filling out all the related calculation boxes (this was when they were still trialling the online tax return), and put zero or N/A in everything else. I could have claimed for ALL KINDS of things back, but it honestly was not worth the time and effort to do so, especially if you got it wrong about something being allowed. The numbers didn't scare me. Even filing it online wouldn't have scared me. But simple things like "what can I claim back and what can't I and how long do I have to keep the evidence of it all" just meant that it wasn't worth my time or hiring an accountant to do it for the odd travelcard and an occasional spot of lunch. Literally, income = X. Expenditure = NIL. Anything else wasn't worth my time to determine it to their extraordinarily un-disclosed criteria to either of our satisfaction.
If you made the tax system simpler, if you tied tax return dates to, say, company start dates, and if you actually had the information and assistance available online... you would probably never need the phone line at all.
And when it comes to benefits, it's quite simple. Tell people what they're entitled to based on HMRC's knowledge, write them a letter (or an online notification) every month reminding them of any eligibilty or circumstance change, and then police that effectively so that people can just simply tell you "Oh, yes, someone lives with me now" or "I got divorced" or whatever, and when it appears on their dashboard every month they can't deny "not knowing". And you can't deny that it would be far simpler to just allocate the benefits according to that data than faff around expecting elderly/disable/etc. people to magically know what they might be entitled to.
"If this happens at precisely one time of the year in excess, too, it means something else is broken: Making everyone file on the same day. It's a nonsense. You could stagger them throughout the year and instantly spread that load across 365 days instead of a handful near tax return time (it's not like that payment is going to happen instantly, it's not like everyone is billed on the same day, etc.)."
They set the target dates for self assessment, e.g. Oct 31st for paper filing, Dec 31st for online if you want to pay by instalments in the next tax year, or end of Jan as absolute limit, but nothing says you have to wait until then.
I've had about 5 emails since April from them saying why not get your assessment out of the way now. My tax affairs aren't complicated, really just the high income child benefit charge, reclaiming gift aid and interest payments over £500 total to declare in case banks have screwed it up so I can knock mine on the head within about 20 minutes once I've got my P60 but YMMV.
Obviously more complicated for the self-employed where they are changing over to quarterly reporting.
... and that's why it won't be done!
I take the same view as you. I don't even self-assess as the TAX office know that it's not worth it. I do claim professional memberships and home office expenses - by letter, every couple of years. I have tried claiming online and it was fine for a few years, but it had changed last time I tried and it is just too obscure to do something so simple, so back to writing a letter.
Return your Tax on your birthday. A date you can remember easily, and that should spread the workload for the office fairly evenly through the year!
The UK tax system’s complexity isn’t an accident. It’s a design feature. Complexity keeps the average person uncertain, anxious, and overpaying - while the wealthy and corporations pay for specialists to navigate the loopholes. The system works for them because they have VIP access: private tax advisers, priority HMRC hotlines, bespoke settlements. Meanwhile, the ordinary taxpayer is dumped into overloaded call centres or labyrinthine online forms, forced to over-disclose and under-claim, terrified of triggering penalties.
When government outsources these broken systems, there’s no incentive to fix them. Why simplify the tax code when the chaos itself creates profit opportunities? Outsourcing contracts, consultancy gigs, software deals - all thrive on the existence of unsolvable problems. The corporations lining up to “solve” HMRC’s mess often have deep ties to political donors, former ministers, or elite networks. You can bet they aren’t bidding to abolish their own revenue stream by making the system clear, fair, and self-service.
This isn’t just inefficiency - it’s a structural class mechanism. The rich glide through the system on polished rails; the rest are left waiting on hold. British “fairness” and “decency” are just the polite wallpaper over what is, fundamentally, a rigged setup.
Until we recognise that the complexity and dysfunction are features, not bugs, outsourcing will keep serving the same elites - and taxpayers will keep paying the price, both financially and in wasted human energy.
This is Labour in power, feeding the working class empty promises while handing the real system over to corporate elites.
>” This is Labour in power, feeding the working class empty promises while handing the real system over to corporate elites.”
You were doing so well.
The complexity of the tax system (and welfare & tax credits systems) is largely due to Conservatives, Labour are using the system they been given, and as you observe availi themselves of the complications it allows.
Child benefit is a good example of a simple benefit getting changed into a class/wealth football, for no real gain to the taxpayer.
The sad bit is that if Reform actually form a government I doubt they will do anything to simply the tax system.
Labour and Conservatives are two wings of the same uniparty, pandering to different demographics (working class vs middle class) while both ultimately serve corporate interests. The tax and welfare complexity is a bipartisan mess, and neither side has the will to dismantle the machinery they profit from.
Hostile states like Russia thrive on the political vacuum created when mainstream parties sell out their voters. They know a desperate, disillusioned electorate is ripe for destabilisation. If Labour doesn’t come to its senses, we may very well see Reform in No 10 - and you can bet Putin will be smiling.
Oh deep joy. It's unlikely to improve but the problem will change!
HMRC love the complex tax system but are not good at helping people navigate it. Now we will get AI or a young Indian just out of Uni on his first job that hasn't the slightest clue of UK circumstances. HMRC will squeeze the supplier and it will only get worse as they reduce service to keep the share price up. I've been watching someone and their expert lawyers go through tax planning. Tax liability seems to be a subjective matter. The lawyers come out with statements such as, HMRC "may" accept this approach, or this is the most probable presentation to be accepted ...
The whole tax system is extortion. There is no way it is efficient or in the country's best interest. I cannot see how I get a return on MY money paid to them. It is used to fund politicians ideas to stay in power or capture more power and after passing a few hands it ends with institutional shareholders of corporations. Because these and the central banks run the world.
We should simplify, abolish all income taxes, all CGT, corporation taxes and just pay a simple scale of purchase taxes. Luxury goods, high tax rate. The tax component of purchases being clearly shown on receipts. That will never happen because it starts moving power through transparency back to the tax payer. Oh and while I'm on a soap box things should be privatised including the NHS. Still free at the point of use etc but with choices and subject to market forces. Harsh as I figure tax payers with power will not want to fund cosmetic surgery, sex changes or ineffective and expensive drugs or interventions. Education too. We could choose if we want our children indoctrinated to cower as toxic white males with multiple genders, educated by computers or brought up as actually tolerant but sensible humans.
So the current system has callers waiting to be answered. Exactly how is replacing the old system with new but keeping the same number of humans to answer the darned phones going to improve things? Pray what “innovation” will help here? Or will it be like warship ops rooms where the humans have a different audio feed in each ear and fit the humans with multithreaded brains so they can process two calls at the same time?
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