The Inland Revenue is set to launch court proceedings against former IT supplier EDS, unless ongoing discussions deliver a suitable compensation package to the embattled tax collector.
Accountancy Age first revealed two years ago that the Revenue would pursue the outsourcing giant for compensation in the wake of its disastrous handling of the tax credits system, and this week Revenue & Customs confirmed that the talks had so far been fruitless.
‘Discussions with EDS and its legal advisers are ongoing,’ a spokesman said. ‘Court proceedings will begin if and when those discussions do not satisfactorily resolve the dispute.’
The department is also embroiled in a £2bn tax credit overpayment scandal, with some families facing bills of up to £1,500. The miscalculations were due to ‘processing and IT errors’ that occurred at the early stages of the tax credits regime, combined with substantial increases in some families’ incomes, which have led to reduced credit awards.
Despite this, the current IT suppliers to Revenue & Customs, Cap Gemini Ernst & Young and Fujitsu Services, will look into the current system to see if any improvements can be made.
A Revenue & Customs spokesman said: ‘There can always be improvements, and Cap Gemini is looking to see what improvements, if any, can be made.’ An EDS spokesman said the company ‘firmly believes these discussions can sort out any outstanding issues’, and that this would be done without recourse to legal proceedings.
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