Victims of Post Office scandal hit by further compensation delays

MORE than 1,000 victims of the Post Office Horizon scandal have yet to be paid extra compensation to resolve a tax blunder.

The 1,100 postmasters affected may have to wait until as late as March next year for a top-up payment to their compensation after a botched scheme meant they would be taxed on pay-outs.

The Post Office Horizon scandal is one of the most widespread miscarriages of justice in British legal history.

Between 2000 and 2014, more than 700 sub-postmasters were prosecuted based on information from the accounting system, with workers wrongly accused of theft and fraud.

An accounting error caused by shortfalls in Horizon software, developed by the Japanese company Fujitsu, made it appear as though money was missing from their branches.

At least four postmasters took their own lives and many more were sacked and bankrupted. A public inquiry into the scandal was established in 2020.

Compensation is being awarded under three schemes dependent on the circumstances of each postmaster.

However, under one option, the Horizon settlement scheme, tax was not originally taken into account. This meant that a postmaster who lost years of income would be forced into a higher tax band after receiving compensation.

The Post Office later agreed to top-up payments to cover the additional tax.

Earlier this week, Kevin Hollinrake, the business minister, revealed that 831 out of 1,924 letters relating to the top-up payment had been issued to affected postmasters and the Post Office was sending 130 letters a week.

However, tax lawyers said that it was too late for the remaining 1,100 postmasters who had not received a letter to avoid problems with their tax return at the end of January.

Dan Neidle, the founder of Tax Policy Associates, said the Post Office was “incompetent” and under the original scheme “almost half the compensation they’d receive would disappear in tax”.

He said that before introducing the top-up, the Post Office had “no clue” and had created a “completely unnecessary problem”.

Mr Neidle said that top-up payments could have been calculated in a few weeks but the Post Office had been unable to do this in six months.

“We’re approaching the Jan 31 tax filing deadline. It’s too late for 1,100 postmasters. They’ll have an average tax bill of £10,000 (some much higher). No help with their tax return. Even worse, some won’t be aware of the issue at all they’ll fall into default with HMRC.

“These are mostly elderly vulnerable people. Landing them in this position is outrageous.”

HMRC has since said that it will cancel any penalties or interest associated with the delay but Mr Neidle said postmasters needed clarity.

A Post Office spokesman said it was providing financial support for those affected.