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HM Revenue & Customs is poised to drop Berkeley from its lineup of hundreds of lenders by ending a decade-long multi-million-pound agreement, a decade-long multi-million-pound agreement.
According to three people familiar with the issue, the UK tax authorities are planning to hand over a new £99 million contract to Lloyd Bank Group. It is expected to be worth £334 million for three banks over 12 years, joining existing providers Natwest and Citigroup.
The decision is a new blow for Barclays after an earlier campaign by environmental protesters to cut ties with the banks over fossil fuel lending.
Earlier this year, lenders also suffered a three-day suspension that caused confusion for millions of customers, including those trying to meet the deadline to make payments to HMRC after filing their self-assessed tax returns.
HMRC is carrying out the procurement process on behalf of the government bank, which was established in 2008, after the Bank of England chose to suspend its trading bank. Government banks were tasked with selecting private sector banks to promote payments on behalf of government agencies and other public institutions such as National Health Services.
Tax authorities are expected to announce the contract later this month. The agreement was a suspension period until March 3, when banks still had the right to challenge the decision, one of the people said.
The contract is awarded in three so-called lots, two of which cover general banking operations and one deal with foreign exchange services. Lot 1, previously awarded to Barclays, will be carried over to Lloyds, with lots 2 and 3 staying at Natwest and Citi, respectively.
According to a bid issued by HMRC, the contract estimates are £99 million for lot 1, £166 million for lot 2 and £69 million for lot 3 over the life of the contract.
This was significantly higher than the total £78.5 million of the contract signed in 2015 for the past seven years, and was then extended for another three years. Barclays could have won approximately £55 million over the ten years of the contract, based on the public contract award notice issued by HMRC.
“We will always follow government procurement rules when awarding contracts to ensure the value of taxpayers’ money,” HMRC said in a statement.
HMRC does not need to change banks, but according to people familiar with the authorities, there is no need to change banks, but in many cases they check the contract to make sure you get the best value from your provider.
The selection process takes into account several criteria that are given the largest weight to service description and cost. However, banks are evaluated based on social value and environmental qualifications, weighing 10% and 7.5% on bids, respectively.
HMRC’s relationship with Barclays has previously been fired from environmental groups. The 2021 extinction revolt called on tax authorities to withdraw “toxic relationships” with British lenders, saying the contract “has no choice but to be complicit in environmental exploitation without consent or knowledge.”
Other institutions, including the National Trust and Charity Christian Aid, have reduced their relationship with Barclays’ green qualifications while Cambridge University is considering the same, the FT reported earlier.
Those familiar with the bank’s position said the decision to drop Barclays has nothing to do with the environmental campaign and the bank will provide HMRC with non-contract seller acquisition services.
The government used Natwest and City as banks until 2015, until Barclays was added to what the authorities described as the “major Lettender exercise.”
