HM Revenue and Customs, the UK tax authority, has chosen Salesforce to supply a new customer relationship management platform under a contract worth up to £2.4 billion including VAT, The Register reported Tuesday. The deal is central to HMRC's effort to modernize how it handles taxpayer contact after years of criticism over its phone service.

What Happened

The contract runs for ten years, from September 2026 to September 2036, with options to extend by up to five more years to 2041. HMRC received two final bids and picked Salesforce over Pegasystems.

Salesforce will provide a software-as-a-service CRM covering customer records and case management, marketing campaigns and messaging, reporting and analytics, and AI capabilities. Some functions, including identity verification, fraud detection and data integration, may be sourced from third parties rather than Salesforce.

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The new platform must integrate with HMRC's updated customer service systems, including a planned contact-center-as-a-service platform. Capgemini won that separate contract earlier this year, worth up to £600 million including VAT over as long as ten years, and it is designed to work alongside the CRM.

The expected cost has climbed during procurement. When HMRC first signaled the project in April 2025, it estimated the value at £1 billion. By the tender stage, the figure had risen to £2 billion excluding VAT, or £2.4 billion with VAT, for a potential 15-year term.

Why It Matters

HMRC's contact operation has become a political liability. In 2023-24, the department cut off nearly 44,000 callers after they had waited 70 minutes, answered only about two-thirds of calls, and left callers waiting more than 23 minutes on average, according to figures cited by The Register. The Salesforce and Capgemini contracts together form the technical backbone of HMRC's attempt to fix that.

The length of the award also matters. A term that can stretch to 2041 ties a core taxpayer-facing system to Salesforce's platform for a decade and a half, and shifting away later would mean migrating records and case histories for millions of people.

Context

Large UK public sector technology programs have a long record of cost overruns and delays, which puts the rise in HMRC's own estimate before contract award under a spotlight. The inclusion of AI in the scope also means HMRC will have to show how automated tools are used in handling taxpayer cases.

For Salesforce, the win adds a marquee government customer at a time when it is pushing AI agents across its CRM products. Pegasystems, which specializes in case management and workflow software, loses out on a flagship public sector deal.

What to Watch

With the contract term starting this month, the most important dependency is integration with Capgemini's contact-center platform, since callers will experience the two systems as one service. Other points to watch are which third parties supply identity verification and fraud detection, and whether HMRC publishes targets for call handling tied to the new systems.