HMRC awards Salesforce £2.4bn CRM contract in taxpayer service overhaul

Ten-year deal to replace ageing systems after years of customer service complaints

By LineZotpaper
Published
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HM Revenue & Customs has awarded Salesforce a contract worth up to £2.4 billion including VAT to provide CRM software and related services for at least ten years, as part of a sweeping modernisation of taxpayer-facing technology.

The contract, which runs until September 2036 with possible extensions to 2041, aims to replace HMRC's existing customer relationship management systems with a Salesforce software-as-a-service platform. The deal covers customer and case management, marketing campaigns, messaging, reporting, analytics and AI capabilities. Identity verification, fraud detection and data integration may be supplied by third parties.

Salesforce won the contract after a competitive process. The contract award notice states HMRC received two final bids, with Salesforce beating Pegasystems, better known as Pega, whose platform combines low-code development, automation and AI.

HMRC initially estimated the procurement at £1 billion during market engagement in April 2025. The subsequent tender put its potential 15-year value at £2 billion excluding VAT, or £2.4 billion including it.

The contract forms part of a broader overhaul of HMRC's customer-facing technology. In April, the department awarded Capgemini a contact-centre-as-a-service contract worth up to £600 million including VAT, intended to integrate with the new CRM platform.

The modernisation push follows years of criticism over HMRC's customer service. In 2025, the House of Commons Public Accounts Committee accused the department of deliberately degrading its telephone service to push taxpayers toward online channels. The PAC found that phone performance reached an all-time low during 2023-24. During the first 11 months of that financial year, HMRC disconnected nearly 44,000 callers who had spent 70 minutes waiting for an adviser because its system could not cope with demand. Only two-thirds of calls were answered, and the average wait time exceeded 23 minutes. An earlier National Audit Office report found that callers collectively spent 798 years on hold during 2022-23.

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Analysis

Why This Matters

  • British taxpayers are directly affected by HMRC's customer service quality. This £2.4 billion investment signals a long-term commitment to digital channels, potentially reducing phone wait times but raising questions about access for less tech-savvy users.
  • The deal is one of the largest single IT contracts awarded by a UK government department, underscoring the scale of public sector digital transformation and the growing reliance on major cloud platforms.
  • If the new CRM fails to deliver the promised improvements, the cost to taxpayers and public confidence could be significant, especially given HMRC's recent track record.

Background

HMRC has faced sustained criticism over its telephone service, with parliamentary committees and auditors documenting rising wait times, abandoned calls and deliberate channel shifting. The department has been pursuing a digital-first strategy for years, but the technology underpinning its customer interactions has struggled to keep pace with demand. The Salesforce and Capgemini contracts represent a bet on modern, cloud-based platforms to finally address systemic issues, but large-scale government IT projects historically carry risks of cost overruns and delays.

Key Perspectives

HMRC: The department sees the contract as a necessary upgrade to deliver efficient, modern taxpayer services. It argues that integrating CRM and contact centre systems will streamline interactions, reduce administrative burdens and ultimately save money over the long term. Salesforce: The company wins its largest UK public sector deal to date, cementing its position in government CRM. The long-term commitment provides predictable revenue for its cloud and AI offerings. Critics and skeptics: Public spending watchdogs and taxpayer groups may question the price tag, especially given HMRC's past service failures. Integration risks, vendor lock-in and the challenge of migrating legacy data are common concerns with such megadeals.

What to Watch

  • Implementation milestones: When the first modules go live and whether the new CRM integrates smoothly with Capgemini's contact centre platform.
  • Impact on phone service metrics: Whether average wait times and abandonment rates improve once the new system is operational.
  • Parliamentary committee scrutiny: The PAC and National Audit Office are likely to monitor progress and costs, potentially publishing follow-up reports in coming years.

Sources

Zotpaper

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