MYOB has suffered a blow - its software has been dumped by the largest preparer of individual tax returns. H&R Block, which prepares 500,000 returns a year, switched to Elite Practice Solutions' products from an MYOB package on July 16, The Daily Telegraph has learned.

"It was one of those decisions you don't make lightly," said H&R Block managing director Phil Hunt. "This year's MYOB product was revamped. A lot of the back-room features didn't suit the way we do business. "We need to transfer files between company-owned sites. Using the MYOB product was very, very slow. "Coming into the busiest time of the year, we wouldn't have coped."

So MYOB Tax was removed from about 1200 computers in 250 company-owned H&R Block branches across the country and replaced with Central Elite and Tax Elite. Elite general manager Scott Ganino said H&R Block had approached his company after testing in June. "H&R Block weren't happy with what was happening," he said.

MYOB has yet to tell investors it has lost the H&R Block contract. Last night chief executive Craig Winkler said the deal was not of great financial consequence. "I almost wish it was but H&R Block pay very little for their software," Mr Winkler said. "It's very disappointing, but commercially, it's not at all damaging." Neither Mr Hunt nor Mr Winkler would reveal the value of the contract.

"The (MYOB) software is just not working to their satisfaction," The body representing Australia's 8500 certified practising accountants said many software providers were having difficulties. "There is a major problem at the moment," said CPA Australia senior tax expert Gary Addison. Shares in MYOB - which recently slashed revenue and profit forecasts - fell 1c to 57c yesterday. They were trading above $5 in June last year