Post Office IT scandal victims miss out on £15million in payouts due to income tax

  • After a 20-year campaign victims finally received payouts
  • Mr Hunt confirmed there were tax exemptions worth £30million for 557 victims

The Chancellor has refused to hand back £15million taken from Post Office IT scandal victims’ compensation packages.

Over 15 years, thousands of sub-postmasters were accused of stealing despite financial irregularities being due to a glitch in the Horizon computer system.

After a 20-year campaign, backed by the Daily Mail, victims finally received payouts. But they found thousands of pounds in income tax had been taken.

Jeremy Hunt confirmed there had been tax exemptions worth £30million for 557 victims but he refused to extend them to others. 

The decision affects 2,417 postmasters who lost out financially but were not prosecuted. 

The Chancellor has refused to hand back £15million taken from Post Office IT scandal victims’ compensation packages

Post Office figures show it retained £11.3million in income tax from the first 2,128 settlements. This is likely to have risen to just under £15million as 191 more have since been made.

One victim, Francis Duff, 80, received an offer of compensation, but the Post Office said it would withhold £71,533 in income tax and £251,359 under bankruptcy proceedings, leaving him with just £8,000.

Dan Neidle, a former head of tax at a magic circle law firm, said: ‘I’m beyond disappointed that the tax exemption for victims of the Post Office scandal doesn’t cover all postmasters. Everyone should be treated the same. I don’t understand the counter-argument.’

Tory peer Lord Arbuthnot, a long-time campaigner for postmasters, added: ‘I know that the new Post Office minister is determined to settle this tax problem.

‘It’s odd that it didn’t appear to occur to anyone beforehand, but I do believe that very soon we shall be seeing the Government coming up with a good solution.

‘And they must, because until this issue and the issue over bankruptcies are sorted, we shall not achieve fairness, and that’s the key to the entire scandal.’

Labour MP Kevan Jones, another long-time campaigner for postmasters, said: ‘This situation is appalling. The victims of the Post Office Horizon scandal should not have their compensation clawed back by the Treasury.’

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