HM Revenue and Customs has denied outright that it plans to offshore tax processing to India, in a bid to save £200 million.

It had been reported that such a move was planned, involving the tax and national insurance files 30 million adults. Any offshoring of personal files could raise data protection concerns because other countries have differing rules around information.

But an HMRC spokesperson today told CIO UK sister title Computerworld UK the reports were “absolute nonsense”. Under the contracts with suppliers Capgemini and Fujitsu, the services cannot be delivered from outside the UK, he said.

HMRC did acknowledge the existence of an IT cost cutting plan, called Project Quantum, but insisted this would not involve personal tax files being sent offshore.

The spokseperson at HMRC did not give further details, saying only that cost cutting plans existed. “Project Quantum is specifically focused on value for money in the IT field," the spokesperson said.

Work sent offshore could involve services such as software development, where sensitive taxpayer data itself is not a part of the project, it is understood.

Last week Computer Weekly reported that Capgemini and Fujitsu had been weighing up the move to offshore tax file processing. The suppliers planned to produce a cost saving plan with more details in September, it was reported.

The need for savings had become pressing after the costs on the Aspire contract doubled to £8.5 billion since its planned budget in 2004.

Capgemini has Indian offices in Bangalore, Mumbai, Madras, Hyderabad, Pune and Kolkata, which employ around a fifth of its 92,000 staff. It did not comment on ongoing work.

Mark Wallace of the Taxpayers' Alliance told the tabloid Daily Mail he was outraged at the notion of taxpayer files going offshore. “HMRC should focus on doing their job right, rather than opening up our information to even more loss, theft or abuse,” he said.

The offshoring of civil service work is already a heated topic, after it emerged in recent weeks that the British Council plans to send 85 IT roles to India.