Tax experts have raised concerns that the Post Office may have underpaid over £100 million in taxes by deducting payments to victims of the Horizon scandal from its profits. This practice

could be considered a breach of the law and may jeopardize the company's solvency, according to Dan Neidle from Tax Policy Associates. The alleged shortfall, if repaid to HMRC, could result in the government having to financially support the Post Office, given its ownership by the government. The company has been compensating sub-postmasters whose theft convictions were overturned.

Dan Neidle suggests that the Post Office may have also overpaid senior executives, as the compensation provisions were apparently ignored when calculating executive pay. The company defends its financial information as "appropriate and accurate," while acknowledging ongoing discussions with HMRC and the Department for Business and Trade. HMRC is reportedly investigating the way the Post Office accounted for compensation payments, and notes in the company's financial accounts recognize the risk of a significant adverse tax ruling.

Experts argue that deducting compensation for unlawful acts from trading profits for tax purposes is not generally allowed, and HMRC's investigation could have serious financial implications for the Post Office. The controversy raises questions about the potential insolvency of the Post Office and the need for government intervention. Additionally, concerns have been raised about executive pay, with bonuses allegedly being based on a level of profitability that disregards compensation provisions. Critics warn that overlooking such tax issues could have serious consequences, akin to demands for resignations in a public company facing insolvency. Photo by Chris Shaw, Wikimedia commons.