UKGI00049058 - Press Release - Government announces tax top-up payments for Postmasters affected by the Horizon IT Scandal

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Press release

Government announces tax
top-up payments for
postmasters affected by the
Horizon IT Scandal

There will be top-up payments to
postmasters under the Historic Shortfall
Scheme (HSS)

From: Department for Business and Trade
(/government/organisations/department-for-
business-and-trade) and Kevin Hollinrake MP
(/government/people/kevin-hollinrake)

Published 19 June 2023

This was published under the 2022 to 2024 Sunak
Conservative government

¢ Postmasters in the Historic Shortfall Scheme
(HSS) will receive top-ups to their compensation,
to ensure that the amount they receive is not
unduly reduced by tax.

e HSS claimants will also be able to claim up to
£300 for independent advice on filing their tax
returns.

¢ Government has introduced the top-ups to
ensure that postmasters receive full and fair
compensation.

All postmasters in the Historic Shortfall Scheme will
be given a top-up payment in addition to their
compensation award as soon as the Post Office
has calculated all the individual payments.

The tax treatment of awards in the Historical
Shortfall Scheme has, in some cases, had the
effect of unfairly reducing the compensation
received by postmasters, which these top-up
payments will address.

Claimants will also be able to claim £300 of further
support for independent tax advice, to help them
when filing their tax returns.

The Government is determined that postmasters
affected by the Horizon IT Scandal receive the
compensation they deserve, and today’s
announcement marks another step in ensuring
compensation is fair and consistent.

Postal Affairs Minister Kevin Hollinrake said:

“ We are committed to ensuring that
postmasters and their families receive the full
and fair compensation they deserve for the
pain and suffering caused by the Horizon
scandal.

“ With these top-ups, we’re making sure that
every penny stays in postmaster’s pockets
where it belongs.”

HSS offers were made on a gross basis and
compensation then taxable. This allowed claims to
be processed more efficiently without the need for
postmasters to provide tax information.

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However, this approach did not account for the tax
on compensation when paid as a lump sum, which
means that postmasters are not necessarily
restored to the position they would otherwise have
been in. Top-up payments are the quickest and
most efficient way to address this issue, and will be
exempt from tax.

In total, an additional £26 million is expected to be
delivered to claimants through these top-ups which
will be tax exempt.

Background

e Claimants can claim for up to £300 costs incurred
for tax advice to be reimbursed by the Post
Office.

e The top-up payments are exempt from income
tax, capital gains tax and national insurance
contributions.

e Starting in the late 1990s, the Post Office began
installing Horizon accounting software, but faults
in the software led to shortfalls in branches’
accounts. The Post Office demanded sub-
postmasters cover the shortfalls, and in many
cases wrongfully prosecuted them between 1999
and 2015 for false accounting or theft.

e The issue of taxation does not apply to the Group
Litigation Order Scheme or the Overturned
Convictions where there is a tax exemption in
place.

Published 19 June 2023

OGL

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