By Andy McCue, 21 June 2005 16:20
NEWS The Inland Revenue is threatening to drag EDS through the courts unless compensation is agreed for overpayments that resulted from problems with the new tax credit IT system.
A software error on the EDS-designed tax credits IT system resulted in overpayments to 455,000 households in 2003 totalling almost £100m and the Inland Revenue has admitted it may be forced to write off more than £50m of that sum.
But talks over compensation have become deadlocked and, following an executive committee meeting of the HM Revenue and Customs department (HMRC), the Revenue has issued a statement warning it will sue EDS and air all the details of the tax credit problems in the High Court.
An HMRC statement said: "HMRC is clear that if it is not possible to reach an acceptable negotiated settlement, it will commence legal proceedings. Such proceedings will begin with the issue of HMRC's claim and detailed particulars of [the] claim which will be public documents in the Technology and Construction Court of the High Court."
John O'Brien, analyst at Ovum Holway, said in a research note that a court case could be extremely hazardous to EDS' already battered reputation in the public sector.
"Political pressure is bearing down and EDS will be keen to avoid this situation being dragged through the courts. However, the company will need to be careful how it plays the situation; as well as the potential millions, the company's reputation across the public sector is at stake should things get nasty," he said.
A spokesman for EDS said: "We continue to progress negotiations and hope they can bring about a settlement without litigation."
Comments
There are 6 comments. Join the discussion
1. Roger Huffadine
Let's have no compromise.
The full damages or the high court.
Its my money that I paid in taxes that EDS has squandered and I want it back where it belongs in Central Government.
2. Martin Stanforth
No Roger, It's not your tax money; it's somebody else's money the Inland Revenue didn't collect.
Besides squandered is squandered right? - who cares whether it's EDS or central govt. that squanders it!!
I'd be (pleasantly) surprised if EDS signed a contract that made them liable for loss of income incurred as a consequence of using their system, so I doubt IR has much of a leg to stand on. Presumably IR signed-off the spec and formally accepted the system as being fit for purpose after extensive testing?
...what? you don't think they might have skimped on testing in order to go live on time do you?!!!
3. Guy Kirkwood
Remind me again, how did EDS win the MOD deal?
4. anonymous
And EDS wants in on ID cards. It is beyond comprehension. How do these companies get away with it?
5. David J Walker
"How do these companies get away with it?"
Put it like this, if Ken Lay and his associates had been British (or citizens of pretty much any other European country) instead of American, they would be in the House of Lords or national equivalent by now.
6. anonymous
As a contractor working for EDS I can quite happily report that they are truly a bureaucratic dinosaur of inefficiency and incompetence who hire in all professional technical staff and then treat them with total disdain. I wouldn't let EDS run an automated car wash!