The Inland Revenue is again threatening to sue EDS over the failure of its tax credit system.

The two have been at loggerheads for some time and the Revenue last let its frustrations leak out in June. The Inland Revenue sacked EDS in December 2003 and awarded the work to CapGemini, Fujitsu and BT.

Almost half a million of the poorest households were given £2.2bn too much in tax credits in 2003-2004. The Revenue then tried to get this money back. The Revenue blame EDS for providing inadequate systems while EDS blames the overpayments on the policy rather than the implementation of the system and the Revenue for changing its mind while the project was put in place.

In more bad news the National Audit Office yesterday refused to sign off the Revenue's accounts. The NAO said Revenue error rates were unacceptably high - some ten per cent of PAYE tax payers are paying the wrong amount. ®

Related stories

• EDS keeps bulk of GM outsourcing deal (3 February 2006)
• EDS coughs up over Tax Credit debacle (22 November 2005)
• EDS scrapes to profit (2 November 2005)
• UK taxpayers lose billions to errors, fraud and crap IT (12 October 2005)
• Computer error destroyed 1m UK tax records (9 September 2005)
• EDS re-inks deal worth £2.6bn with DWP (25 August 2005)
• UK Inland Revenue may sue EDS (4 July 2005)
• EDS tax fiasco hit with two barrels (22 June 2005)
• EDS UK cuts jobs (18 May 2005)
• EDS to UK gov - give us our £13m (31 March 2005)