EDS in £71.2m sterling settlement with UK Revenue

23 Nov 2005

Texan computer services giant EDS has agreed to pay the UK’s Revenue and Customs some £71.25m sterling in compensation over problems that developed with a computer system it developed for UK tax agency, the Inland Revenue.

The deal includes an upfront payment and payment of additional amounts over time. Specific terms of the agreement were not disclosed.

It is understood EDS provided IT services to the Inland Revenue under an outsourcing contract between 1994 and 2004.

The problems that the compensation relates to stemmed from a system that EDS developed to support the Inland Revenue’s Child Tax Credit and Working Tax Credit, which were introduced in April 2003.

The Inland Revenue and Customs and Excise integrated in April 2005 to form the Revenue and Customs department.

Doug Hoover, EDS managing director Ireland, the UK and Africa, stated: “We were always focused on reaching an equitable settlement. The UK Government remains a very important client for EDS and we are pleased that we have been able to settle this dispute without incurring the costs and uncertainties of what would have been a lengthy and complex legal case.”

The company said the settlement does not impact EDS’ prior financial guidance for the fourth quarter of 2005 and full-year 2006.

By John Kennedy