The Post Office has announced that all postmasters involved in the Historic Shortfall Scheme (HSS) will receive a top-up payment in addition to their compensation award. The purpose of these
top-up payments is to address the unfair reduction of compensation caused by the tax treatment of awards in some cases.
To further support the claimants, an additional £300 will be available for tax advice, assisting them with their tax returns.
The government is fully committed to ensuring that postmasters affected by the Horizon IT Scandal receive the rightful compensation they deserve. This recent announcement marks another important step in ensuring that compensation is fair and consistent across the board.
Kevin Hollinrake, the Postal Affairs Minister, emphasized the government's dedication to providing postmasters and their families with full and fair compensation for the distress caused by the Horizon scandal. The top-up payments are designed to ensure that every penny rightfully remains in the pockets of the postmasters.
The HSS was established in accordance with tax legislation and other commercial compensation schemes. Compensation offers were made on a gross basis, and subsequently, the compensation became taxable. While this approach facilitated more efficient claims processing without requiring tax information from postmasters, it failed to consider the tax implications of lump-sum compensation payments. As a result, postmasters were not necessarily restored to their original financial position. The introduction of top-up payments is the quickest and most efficient way to address this issue, and these payments will be exempt from tax.
Overall, an estimated £26 million will be distributed to claimants through these top-up payments, ensuring they receive the full amount without tax deductions.
Background Information:
Claimants can request reimbursement of up to £300 for tax advice expenses incurred during the process.
The top-up payments are exempt from income tax, capital gains tax, and national insurance contributions.
The Horizon accounting software, installed by the Post Office in the late 1990s, experienced faults that resulted in shortfalls in branch accounts. Sub-postmasters were wrongly held responsible for these shortfalls, leading to wrongful prosecutions for false accounting or theft between 1999 and 2015.
The taxation issue does not apply to the Group Litigation Order Scheme or the Overturned Convictions, where there is an existing tax exemption. Photo by Rept0n1x, Wikimedia commons.