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Tax credits bill is £236m and climbing

The government has revealed that it has so far paid EDS and Capgemini a total of £236m for the failing tax-credits system.

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The government has revealed that it has so far paid EDS and Capgemini a total of £236m for the failing tax-credits system.

The figure does not include VAT and covers work by the pair up to August 2005, since the system went live in April 2003.

The value of the payments was revealed by paymaster general Dawn Primarolo in answer to a parliamentary question this week.

EDS initiated the IT system under an outsourcing deal in 2003 and was then replaced by Capgemini in the summer of 2004 after the system hit problems.

HM Revenue and Customs (HMRC) is currently threatening to take EDS to court, after the system failed to properly control and manage tax credits, leading to massive overpayments.

But despite Capgemini taking over, the parliamentary public accounts committee has questioned whether HMRC has the ability to rectify continuing problems with the system.

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