Post Office faces '£100m bill and insolvency over Horizon compensation tax break', expert tells LBC

13 January 2024, 12:27 | Updated: 13 January 2024, 12:44

By Kieran Kelly

@kellyjourno

The Post Office faces a £100m bill and insolvency after it claimed a tax break for compensation payments made to sub-postmasters affected by the Horizon IT scandal.

Dan Neidle, who is the head of non-profit organisation Tax Policy Associates, claims the Post Office wrongly applied for relief on the £934m damages provision.

According to Mr Neidle, deductions cannot be for "unlawful" activities, telling LBC: "If you do something illegal, the expenses of doing the illegal thing are not tax deductible.

"That compensation should not have been written off against their tax.”

Top tax lawyer breaks down Post Office's difficult scheme

The Horizon scandal has been thrust back into the limelight after ITV's drama 'Mr Bates vs the Post Office' aired last week.

It told how hundreds of sub-postmasters were wrongly convicted of stealing money from the Post Office, who relied on evidence from Fujistu's dodgy Horizon system.

Read More: 'Ultimate deterrent': Post Office minister wants to see people jailed over Horizon IT scandal

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Thousands more Post Office managers were made to pay back cash that had disappeared from the dodgy accounting system.

Mr Neidle said he had dug through Post Office accounts and found they had crested a provision in the accounts for compensation that was made to the postmasters.

He wrote on Twitter: "The Post Office has boasted about finally making a trading profit. Our findings show that it has in fact made a very substantial loss."

"Bonuses have been paid to the executive team based on an apparent level of profitability which does not exist," he added.

“The disclosed information on taxation in Post Office’s Annual Report and Accounts for 2022/23, published on December 2022, is appropriate and accurate. Discussions with HMRC and the Department of Business continue,” a spokesperson for the Post Office said.