By Jessica Frank-Keyes
Fears over the Post Office’s finances are growing as it emerged it claimed tax relief on compensation payouts, with warnings it could risk a £100m tax bill and possible insolvency.
Latest accounts show the Post Office made a £435m provision for payments and costs to the wrongly accused sub-postmasters of the Horizon scandal, the Financial Times reported.
The news emerges as the Sunday Times reported the government, under Theresa May, pushed through former boss Paula Vennells’ CBE nomination despite Horizon concerns being raised.
The paper said think-tank Tax Policy Associates found the Post Office previously claimed tax deductions on money paid out for compensation, which are not generally deductible.
Founder and tax expert Dan Neidle told the FT if HM Revenue & Customs ruled against the Post Office, it could owe at least £100m in corporation tax and “may no longer be solvent”.
But a Post Office spokesperson insisted “disclosed information on taxation… is appropriate and accurate”.
It comes as the Mail on Sunday reported Fujitsu – the firm behind the faulty IT software that led to prosecutions – had to earmark over £500m to plug a blackhole in its UK pension fund.
The Japanese firm is increasingly under pressure to contribute to compensation costs for the victims of the UK’s most widespread miscarriage of justice.
Recent accounts, the MoS reported, showed Fujitsu has not said any money aside for payouts as no legal action has been taken against it so far.
And that it had to add another £40m into the pension fund of British computer firm ICL, which it bought in 1998, before Horizon was launched in Post Offices, due to the £339m shortfall.
The deal saw Fujitsu take on the pension scheme with 9,000 mostly retired members, paying out guaranteed retirement income. It’s expected to cost the firm around £504m up to 2032.
Next week Paul Patterson, Fujitsu UK boss, is set to be quizzed by MPs about the scandal and will appear at the statutory inquiry chaired by former High Court judge Sir Wyn Williams.
Fujitsu declined to comment on the growing pension fund gap.
The Post Office spokesperson said: “We have regular conversations with the government who are our sole shareholder.
“Our correspondence in respect of this issue was about ensuring that the tax treatment of funding we receive from the government to pay compensation was treated in the same way as other government funding that we receive.”
While postal affairs minister Kevin Hollinrake told the BBC this weekend he wanted to see those responsible for the scandal jailed and “held to account” as the “ultimate deterrent”.
Hollinrake said after the official inquiry reaches a verdict, “if it’s individuals, those people can be criminally prosecuted, potentially, and potentially can go to jail.
“I think we’d all like to see that kind of route taken. People must be held to account.”
