An unusual £71.25m "aggregate" settlement between EDS
and HM Revenue and Customs over tax credits is likely to be
discussed at a House of Commons committee next month.
In an agreed statement, HMRC and EDS said they had successfully
concluded an "aggregate settlement of £71.25m, including an
up-front payment and payments of additional amounts over time".
MP Richard Bacon, a member of the Public Accounts Committee,
said he wanted to know whether the £71.25m would actually be paid
to the government.
HMRC refused to answer questions about whether significant
amounts of the £71.25m would actually pass from EDS to HMRC, or
whether the figure was mainly a paper-based sum. A spokesman for
the department said the matter was "commercial in confidence". HMRC
confirmed that EDS was continuing to work for the department but
was doing only two small pieces of work that were due to end this
year.
Bacon said, "I can see no reason whatsoever why the settlement
should be commercially confidential."
The supplier suggested in a statement that the settlement does
not have any major effect on its profits. It said, "The settlement
does not impact EDS' prior financial guidance for the fourth
quarter of 2005 and full-year 2006."
Talks between EDS and the government over compensation for
software-related problems which caused incorrect amounts of tax
credits to be paid to claimants, lasted about a year without a writ
being issued.
Both sides were reluctant to go to court. Neither wanted the
uncertainty of a hearing, and the government is unlikely to have
wanted internal ministerial and civil service documents over the
tax credits released in open court.
These documents could have included confidential Gateway reviews
- independent assessments of the tax credits project - by the
Office of Government Commerce. Officials across government have so
far blocked all requests under the Freedom of Information Act to
publish the results of Gateway reviews.
It is possible that the "aggregate" sum could include various
forms of non-cash payment. These could range from free services to
a reduction in the costs of past and future work for the
government.
Bacon is expected to question David Varney, chairman of HM
Revenue and Customs, on the settlement at a committee hearing on 14
December.
EDS declined to add to its official statement, in which Doug
Hoover, EDS managing director for the UK, Ireland and Africa, said,
"We were always focused on reaching an equitable settlement."