4 The Department's settlement with
EDS
22. Serious problems with the introduction of the
computer systems used to support tax credits delayed the processing
of claims and led to incorrect payments being made. In November
2005 the Department announced it had settled its claim for compensation
with EDS for £71.25 million. The settlement includes cash
payments by EDS and the off setting of certain amounts which would
have otherwise been due from HMRC to EDS. Of this sum, staged
payments of up to £26.5 million are contingent on EDS winning
new business with the United Kingdom Government. Final settlement
of the dispute is contingent on EDS paying the full amount of
£71.25 million and the Department has reserved the right
to reopen court proceedings if the full amount is not received.
23. In practice, the flow of payments from EDS has
been extremely slow because EDS has been less successful in winning
government contracts than the Department expected.[22]
It is highly unlikely that new business for EDS will generate
the full payment by the end of 2008 that the Department envisaged.
The Department acknowledged that it would take a long time to
receive the full amount at the present rate of payment.[23]
24. The Department has held meetings with EDS. It
is determined to ensure that it obtains the full settlement even
if the new business for EDS is not enough to generate the full
payment. The Department is taking steps with EDS that it believes
will accelerate the rate of payments from January 2008 and will
return to litigation if the full amount of the settlement does
not look to be forthcoming within the envisaged period. The Department
has discussed with its lawyers a process for bringing the matter
back to the courts if the acceleration of payments during 2008
does not meet its expectations.
22 Q 58 Back
23
Q 63 Back
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