HMRC waives late tax return fines for sub-postmasters affected by Post Office scandal

HMRC waives late tax return fines for sub-postmasters affected by Post Office scandal
Dan Martin
Dan MartinDan Martin Content & Events

Posted: Thu 11th Jan 2024

Sub-postmasters and mistresses caught up in in the Horizon IT scandal who have not received top-up compensation payments "in good time" to file a Self Assessment tax return by the 31 January 2024 deadline will not face any penalties, HM Revenue & Customs (HMRC) has announced.

Hundreds of self-employed sub-postmasters were wrongly convicted of false accounting, theft or fraud between 1999 and 2015 after faulty software set up by Futijsu suggested that money had been stolen. Some were jailed, many went bankrupt, lives were ruined and several died before being compensated.

The scandal has been reported in the media for many years but it has exploded into public consciousness this month as a result of ITV drama Mr Bates vs The Post Office. The show has been watched by more than nine million people.

Compensation was paid to around 1,000 postmasters through the Horizon Shortfall Scheme (HSS) in the 2022/23 tax year. This scheme was set up to compensate those who weren’t convicted but paid back the losses that the faulty software said they were responsible for.

Due to the design of HSS, recipients may have to pay income tax and National Insurance by submitting a Self Assessment tax return which is due by 31 January.

In June 2023, the government announced that those compensated by HSS would receive top-up payment to ensure "the amount they receive is not unduly reduced by tax".

With many still waiting for the top-up, HMRC says it will not charge any late penalties or interest to those unable to submit a tax return by the deadline because they haven't received the payment "in good time".

In official guidance, HMRC said it has set up a dedicated support line to help postmasters. The number is 0300 322 9625 and it’s open Monday to Friday from 8am to 6pm.

Those who received HSS compensation payments between 6 April 2022 and 5 April 2023 and have not yet been asked by HMRC to file a Self Assessment tax return by 31 January should contact the support line.

The tax authority also urged sub-postmasters to take advantage of the £300 provided by the Post Office to access independent tax advice.

Accountants offer advice to sub-postmasters

As well as the HMRC support and guidance, a group of accountants are offering free tax advice to sub-postmasters.

On 20 December, tax lecturer and chartered accountant Rebecca Benneyworth posted on X, formerly Twitter, saying:

"I'm pushed with tax returns for clients but if any affected subpostmasters need help I will help [free of charge]. Please will others with the appropriate skills also volunteer."

The website has since been set up for affected individuals to access help and for accountants who want to get involved.

Law to exonerate convicted postmasters

During Prime Minister's Questions in the House of Commons on Wednesday, Rishi Sunak announced that the government will introduce emergency legislation to exonerate convicted sub-postmasters and postmistresses in England and Wales. He said:

"Mr Speaker, this is one of the greatest miscarriages of justice in our nation's history.

"People who worked hard to serve their communities had their lives and their reputations destroyed through absolutely no fault of their own.

"The victims must get justice and compensation. Sir Wyn Williams' inquiry is undertaking crucial work to undo, to expose what went wrong, and we've paid almost £150m in compensation to over to 2,500 victims.

"But today I can announce that we will introduce new primary legislation to make sure that those convicted as a result of the Horizon scandal are swiftly exonerated and compensated.

"We will also introduce a new upfront payment of £75,000 for the vital [Group Litigation Order] group of postmasters."

Sunak's official spokesperson told journalists that the overturning of the convictions will be done on a "blanket basis" to clear people's names while "making sure they access the compensation they rightly deserve as quickly as possible, instead of waiting for years for the courts to wade through hundreds of convictions”.

First minister Humza Yousaf confirmed that affected sub-postmasters and mistresses in Scotland will also be exonerated.

In a letter to the prime minister, Yousaf said:

"Given the unique circumstances arising from the Post Office Horizon scandal, it is right that normal processes for appeals are set aside to ensure that justice can now be delivered for those whose lives were greatly impacted by their wrongful conviction.

"The Cabinet Secretary for Justice and Home Affairs, Angela Constance MSP, will contact her counterpart, the Secretary of State for Justice, to discuss how best to progress work in this area, whether this is by ensuring that the UK legislation will either apply directly in Scotland or by developing separate Scottish legislation to deliver the same effect for Scotland.

"I trust that we can work together to ensure that those affected are now able to have their convictions overturned and obtain compensation."

The importance of support groups

Enterprise Nation founder Emma Jones discussed the Post Office scandal on BBC 5 Live's Wake Up to Money. She said:

"You can see the importance of having a support group unfolding in the drama with the subpostmasters saying "I thought I was the only one".

"When people start their own business, they think they're the only crazy person who has decided to give up a day job and turn an idea into business reality. If you have the support of others who are going through a similar experience to you, it can build up your confidence.

"Whether you're going through tough times or good times, make sure that you surround yourself with a tribe of people who are at the same stage as you."

Dan Martin
Dan MartinDan Martin Content & Events
I'm a freelance journalist and event host who helps small businesses and the organisations that support them. I'm also Enterprise Nation's news reporter and Bristol Local Leader. I have 20 years of experience as a small business journalist having interviewed hundreds of entrepreneurs from famous names like Sir Richard Branson and Deborah Meaden to the founders behind brand new start-ups. I've worked for a range of leading small business publications and support groups, most recently as head of content at Enterprise Nation where I was responsible for the prolific output of content on the company's blog and social media. I now freelance for Enterprise Nation as the website's news reporter and as the host of the Small Business sessions podcast. I'm based in Bristol where I run and host regular events with the local small business community in my role as Enterprise Nation's Local Leader for Bristol. I also have strong connections with other major business organisations in the south west region. In total, I've hosted over 100 events including conferences with an audience of hundreds for international brands like Xero and Facebook and live web chats from inside 10 Downing Street. With my partner, I co-run Lifestyle District, a lifestyle blog focused on culture, art, theatre and photography.

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