£71m clawed back from IT tax credits chaos

EDS pays taxman back in full

Outsourcing giant EDS has paid back the £71.25m it owed to the UK taxpayer.

In a settlement first announced in 2005, EDS agreed to pay £71.25m to HM Revenue & Customs (HMRC) over problems with the tax credit computer system it designed.

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Difficulties with the system resulted in HMRC overpaying £6bn in tax credits during the three years after its introduction in 2003.

The government said today that it had received the money in full following a decision by EDS to make a one-off lump sum payment to HMRC.

EDS provided IT services to what was then the Inland Revenue under an outsourcing contract from 1994 to 2004.

In 2008 chairman of the Public Accounts Committee, Edward Leigh MP, warned that "HMRC must be prepared to return to the courts" to recoup the full amount from EDS if it was not repaid by the end of 2008.