HM Revenue and Customs has settled a long-running legal dispute with IT
supplier EDS over problems with the tax credit IT system introduced in 2003.
EDS has agreed to pay £26.5m to HMRC settling in full an agreement reached in
2005 to pay a total of £71.25m
A spokesman for HMRC said the department ‘welcomes the settlement’.
Confirmation the case has now been resolved brings to an end a bitter and
high-profile dispute between the government department and one of the world’s
largest IT suppliers.
It will also be a relief for the government which has been plagued by a
series of high-profile IT fiascos.
Problems with the EDS IT system meant thousands of families were unexpectedly
overpaid after the government introduced the tax credit system.
The tax credits were supported by a system built by EDS – then HMRCs main IT
A spokesman for EDS declined to comment when asked to confirm settlement of
the case, saying HMRC were responsible for any communication regarding the
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