HMRC IT is outsourced, the outsourcer has to be profitable!
There is no point in thinking that you could offer do the work for £500 unless you offer to do it for CapGemeni ; see: http://www.channelregister.co.uk/2007/11/13/capgemini_job_cuts/
I think that there might be a markup put on your work as well as some overhead of writing the requirements, formulating the demand for extra IT work when costs are being reduced, 5 layers of management to get the request approved after choosing the appropriate budget line, possibly a committee or two to pass through, then the costed proposal from the outsourcer, the quality plan for the work, fully detailed PERT chart, test specifications, approval process, proposed modifications to service level agreements, approval of tea breaks (oops, only kidding) etc. etc. etc.
Techies like you make things sound EASY. ;-))