HM Revenue and Customs (HMRC)is
threatening to sue services supplierEDSunless it steps up compensation
payments for failures in its IT support for the tax credits scheme,
which led to tens of millions of pounds in
overpayments.
Revenue chairman Paul Gray said his officials had carefully
archived "millions of relevant documents" in preparation for a
court case he hoped would not happen.
The tension between the two sides comes after they signed a
controversial deal in November 2005, in which EDS agreed to
compensate HM Revenue and Customs over tax credits by paying £44m
upfront, and a further £26.5m contingent on EDS winning future
government contracts.
By the end of 2006 EDS had paid less than £250,000 of the £26.5m
- at that rate it would take about 100 years to pay off the full
amount.
Gray told the
House of Commons Public Accounts Committee last week, "I have
been discussing with our lawyers the process for bringing the
matter back to the courts if the acceleration of payments during
the course of next year does not meet my expectations. I hope that
it will."
Gray has held discussions with EDS global chairman Michael
Jordan after expressing a "real concern" about the low level of
payments.
Replying to questions by MP Richard Bacon, Gray told the
committee, "What I can say is that the flow of further payments
over the past few quarters has continued to be extremely small. It
is quite clear that over the past two years EDS has been less
successful in winning contracts for provision of public sector IT
support in the UK than it was expected to be.
"Against that background we have recently been having a series
of meetings with the management of EDS. I and my team have been
making clear to EDS that the present level of payments cannot
continue indefinitely.
"I am determined to ensure that we obtain the full amount of the
settlement, even if the flow of new business to EDS is not enough
to generate the full payment to us."
Last week EDS agreed measures with HMRC that should lead to
increased payments from January 2008. Gray said, "However, the
proof of the pudding will be in the eating."
There is no suggestion that EDS has breached the agreement with
HMRC. The settlement of the £26.5m is subject to how much UK
government business it won.
EDS declined to comment.