MPs have called on the government to take legal action against outsourcing giant EDS to recoup the millions of pounds the company still owes over the tax-credits IT fiasco.

In a settlement EDS agreed to pay £71.25m to HM Revenue & Customs (HMRC) due to problems with the tax-credit computer system it designed.

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

EDS agreed it would pay £26.5m of the settlement when it was awarded new contracts by the government, but a report by parliamentary spending watchdog the Public Accounts Committee (PAC) has found the IT services company has repaid "little" of this sum — because the government has awarded EDS less work than expected.