PracticeConsultingEDS faces tax credit penalties

EDS faces tax credit penalties

Computer services giant EDS is facing the prospect of financial penalties for its role in the farcical implementation of the Inland Revenue's new tax credits.

Link: EDS faces SEC stock and earnings probe

The computer systems that EDS supplied have disappointed Revenue officials, and have contributed to thousands of families being without vital financial support.

The situation became so bad that hundreds of Revenue staff across the country held spontaneous 15-minute walkouts last week in protest at the stressful working environment caused by dealing with an enraged public.

Sir Nick Montagu, chairman of the Inland Revenue, said that EDS is ‘accountable’ for its role in the huge problems faced by the embattled government department.

Sir Nick told Accountancy Age that the ‘systems they supplied did not deliver what they were expected to deliver and we are going to have to have some uncomfortable conversations with them’. He added: ‘I don’t want to say “yes” [financial penalties will be imposed on EDS] but it certainly is not out of the question.’

Government spending watchdog the National Audit Office will look into the tax credit fiasco as part of its autumn report on the department and a spokesman said it would investigate everything that ‘affected what the government department did’.

The Public and Commercial Services Union, which looks after the interests of Revenue staff, will be taking an active role in the investigation by submitting evidence. ‘EDS should be held more accountable for their role in this,’ said Ian Lawrence, national officer with the PCS. ‘It’s an issue for the National Audit Office…we will be submitting evidence.’ He went on to say that the EDS systems had crashed as many as five times in a fortnight.

The revelations will put intense pressure on EDS, which is in the midst of a bidding battle for the renewal of its contract. The Revenue is evaluating proposals from EDS, BT and Cap Gemini Ernst & Young for the £4bn deal.EDS refused to comment.

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