EDS coughs up over Tax Credit debacle

EDS is to stump up £71.25m to settle its dispute with Her Majesty’s Revenue & Revenue over the disastrous system the services giant built to support the UK’s Tax Credit system in 2003.

EDS said the settlement, under which it will make an upfront payment and hand over “additional amounts over time”, would not impact its earlier financial guidance for Q4 05 or full year 2006.

The system EDS put in place to support the Tax Credit system was widely regarded as a complete and utter shambles. Poor families were overpaid to the tune of £1bn, only for HMRC to claw the money leaving them in worse financial straits than ever.

At the end of 2003, EDS was forced off the contract, although some fingers were also pointed at the revenue itself.

Still, EDS can console itself with the stacks of contracts it has signed with the likes of the UK’s Department of Work and Pensions, Offender Management Service, and the Ministry of Defence.®