Her Majesty's Revenue and Customs (HMRC) is considering outsourcing tax processing operations to India on a long-term basis.
If the proposal materialises, the £8.5-billion worth of back end operations would enable the British government save about £205 million annually.
The work for self-assessment tax returns and PAYE forms for about 30 million UK citizens is currently being done by Capgemini and Fujitsu via a consortium called Aspire, which bagged the contract in 2004.
HMRC and Aspire had initiated an internal project called "Quantum" about six months back, whose aim was to cut costs and bring an annual saving of £205 million. But with HMRC raising the quantum of work from the original contract signed by Aspire in 2004, the cost has also risen and nearly doubled to £8.5 billion.
The work has doubled, since HMRC had underestimated the volume of work when it issued the re-tender in 2004.
Last week, reports emerged in the British media that the British Council was planning to outsource British data jobs to India, which was denied by the department saying that taxpayers information would not go overseas and the Aspire contract did not allow personal tax data or tax forms to be sent outside the UK.