IT Firm May Face £50 Million Compensation Claim

by Jason Gorringe,Tax-News.com, London

30 July 2003

EDS, the US contractor responsible for installing the computer system for the Inland Revenue's tax credit department, is said to be in talks with the government on the question of compensation for the thousands of taxpayers that have been left out of pocket as a result of serious flaws in the system.

According to the Inland Revenue, some 500,000 people have had their child tax credit or working family tax credit delayed as a result of hold-ups caused by the computer system, and some tax experts have estimated it may cost EDS as much as £50 million to fully compensate those affected. As many as 186,000 have yet to receive a payment at all, despite the fact that the system went live in April of this year.

The IT company informed the Daily Telegraph in a statement that: "EDS is prepared to discuss the issue of compensation with the Inland Revenue in relation to the first few months' operations of the new tax credits computer system."

It has been suggested that the minimum compensation payment for each case should be something in the order of £100. According to Chas Roy-Chowdury, head of taxation at the Chartered Institute of Taxation, this alone would add up to £50 million, but "would not include the interest, lost earnings, travel and phone costs taxpayers have run up."

Recommended