HMRC compensation model falls short

Parliament's Public Accounts Committee has published a report that includes the observation that EDS has paid little of the £26.5m in compensation to HM Revenue and Customs that was tied to it winning further government business. This is over two years since the claim for compensation, deriving from serious problems with the IT systems during the introduction of tax credits, was settled. At this stage it is hard to see EDS finding the momentum, and the PAC says it is highly unlikely that new business will generate the full payment. When the arrangement was made it could be seen as HMRC giving the company some leeway to keep its books in order and continue working with government, but the protectors of public finances are unlikely to be impressed with the way it has worked out. Seeking to create a positive relationship between public and private sectors is one thing; leaving a department short of an eight figure sum is another. It suggests that there is not much scope for the model to be used for any future deals in which government seeks redress from a supplier.

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