Home Business News Post Office could have acted ‘unlawful’ claiming tax relief and could face ‘insolvency’

Post Office could have acted ‘unlawful’ claiming tax relief and could face ‘insolvency’

by Amy Johnson LLB Finance Reporter
13th Jan 24 12:32 pm

The Post Office could have acted “unlawful” for claiming tax relief on the £934 million compensation payments to subpostmaters, according to Dan Neidle, the head of non-profit organisation Tax Policy Associates.

The horrific Horizon IT scandal ended up with more than 700 subpostmasters being handed criminal convictions over faulty Fujitsu accounting software which made it look as if thousands of pounds had disappeared.

The Financial Times reported that Neidle said that the Porst Office made the compensation payments to subpostmasters as tax deductible, this is “not correct,” he claimed.

Neidle said, “you only get a tax deduction for payments made ‘wholly and exclusively’ for the purposes of the trade.”

Read more related news:

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Sunak pledges new law to exonerate subpostmasters over the brutal ‘miscarriage of justice’

Fujitsu has over $1 billion wiped off company value following Mr Bates vs The Post Office scandal

The Financial Times was told be other tax experts this is not clear cut, however one said that a company “can generally claim tax deductions for expenses incurred that are closely connected with its trade, even if it is a compensation payment.”

Neidle wrote on X, “The Post Office claimed £934m tax relief for its compensation payments to the postmasters it persecuted.

“That’s outrageous. It’s also unlawful – so the Post Office now faces an unexpected £100m tax bill. It may be insolvent.

“Our team of eminent tax and accounting experts reviewed the Post Office’s accounts for the last ten years in detail and one issue stood out: it has treated the compensation it pays to postmasters as tax deductible.

“That is not correct.

“A source at the Post Office has confirmed to us that HMRC is investigating this and asserting that the Post Office owes tax – in our view they are right to do so.”

Labour MP and Chair of the Commons Business and Trade Committee Liam Byrne said it looks as if the “Post Office” is “double-crossing” the UK again.

Byrne told BBC Radio 4’s Today programme, “It looks like we’ve almost got the Post Office double-crossing the country again by underpaying their taxes and overpaying their bosses.

“It looks like what they’ve basically done is crystalised the losses for the sins of the past, set that against current accounts, but they’ve wanted to avoid the hit to the bonuses of the current management team. And I’m not sure you can have it both ways.”

The Post Office has claimed they disclosed their information on taxation saying it was “appropriate and accurate.”

A Post Office spokesperson said, “The disclosed information on taxation in Post Office’s Annual Report and Accounts for 2022/23, published on 20 December 2023, is appropriate and accurate.

“We have regular conversations with Government who are our sole shareholder and our correspondence in respect of this issue was about ensuring that the tax treatment of funding we receive from Government to pay compensation was treated in the same way as other Government funding that we receive.”

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