Post Office Limited is in tax trouble and may go insolvent #PostOfficeScandal
How convenient for the Post Office!
So the Post Office accounts were mis-stated, meaning there is a huge tax liability that has wiped away profits made by the firm. That in turn means bonuses paid to executives should not have been handed out. And it means the organisation may also be insolvent – so the public purse will once again have to fund the incompetence of a government-owned mess.
There’s the question of tax paid on the money POL took from sub-postmasters to “balance” the alleged thefts – money that should have been paid back to the people the company wronged, of course.
What about the non-tax-deductible costs of prosecuting these sub-postmasters under false pretences – costs that date back more than a decade?
What about its legal fees in fighting the sub-postmasters’ court case – a case that should never have had to be brought?
And finally there is the question of funding by the government – as a shareholder – to POL; this money is taxable too.
Mr Neidle has published a thread on ‘X’, explaining the matter further:
We've a new report: the Post Office claimed £934m tax relief for its compensation payments to the postmasters it persecuted. That's outrageous. It's also unlawful – so the Post Office now faces an unexpected £100m tax bill. It may be insolvent. pic.twitter.com/aaeCrRq0iV
— Dan Neidle (@DanNeidle) January 12, 2024
Normal businesses disclose £100m liabilities. The Post Office tried to hide it. Nothing in past years' accounts. This in the current year: pic.twitter.com/NAVduProhD
— Dan Neidle (@DanNeidle) January 12, 2024
Our team of eminent tax and accounting experts reviewed the Post Office's accounts for the last ten years in detail and one issue stood out: it has treated the compensation it pays to postmasters as tax deductible. That is not correct.
— Dan Neidle (@DanNeidle) January 12, 2024
Here's all the tax relief the Post Office claimed for compensation provisions from 2018/2019 to 2021/22. £934m in all: pic.twitter.com/Vvd6UqI2a7
— Dan Neidle (@DanNeidle) January 12, 2024
There are many cases on this point, but none with facts as extreme as the Post Office scandal.
(Probably the closest relates to a chimney collapsing on someone in an inn)
— Dan Neidle (@DanNeidle) January 12, 2024
So what's the tax impact?
Like most companies, the Post Office does not disclose its actual corporation tax liability for each year. However we can infer this by looking at the figures in its accounts for tax losses brought forward each year. pic.twitter.com/gSUsTwxWpG
— Dan Neidle (@DanNeidle) January 12, 2024
That's very approximate. However it seems likely that the Post Office has a corporation tax liability of over £100m.
— Dan Neidle (@DanNeidle) January 12, 2024
Hence we would expect HMRC to consider penalties of up to 30%, with the precise figure depending on the facts.
— Dan Neidle (@DanNeidle) January 12, 2024
We read this as confirmation that our findings are accurate, and that the Post Office is under HMRC investigation.
And the Post Office is asserting that the disclosure in this year's accounts is appropriate but not defending the accuracy of its previous years' accounts.
— Dan Neidle (@DanNeidle) January 12, 2024
First, the "shortfalls" it recovered from postmasters, which supposedly represented the return of money they had stolen, but actually represented a windfall for the Post Office. This income should have been included in the Post Offices taxable profits. Was it?
— Dan Neidle (@DanNeidle) January 12, 2024
Third, the Post Office has claimed a deduction for all of its legal fees and other costs of fighting the postmasters' claims, and of dealing with the Inquiry. Some of this, particularly the very dubious tactics around the Bates litigation, may be non-deductible.
— Dan Neidle (@DanNeidle) January 12, 2024
If a shareholder pays cash to a company to subscribe for shares, the cash isn't taxable for the company. If a shareholder makes a cash loan to a company, the loan advance isn't taxable.
— Dan Neidle (@DanNeidle) January 12, 2024
HMRC guidance on this is clear – and so businesses typically never obtain funding in the form of simple gifts. https://t.co/JUxPWEZ1hh
— Dan Neidle (@DanNeidle) January 12, 2024
Does any of this matter?
Taxes go to HMRC, a non-ministerial Government department. The Post Office is wholly owned by the Government. Does it matter how much tax the Post Office pays?
— Dan Neidle (@DanNeidle) January 12, 2024
– The Post Office has boasted about finally making a trading profit. Our findings show that it has in fact made a very substantial loss.
— Dan Neidle (@DanNeidle) January 12, 2024
– The existence of a £100m+ hole in the accounts suggests that the Post Office has an alarming lack of the usual financial controls one would expect from a business of this size.
— Dan Neidle (@DanNeidle) January 12, 2024
– Has the Post Office informed the Government, as its shareholder, as to the true state of its accounts and tax position?
— Dan Neidle (@DanNeidle) January 12, 2024
So, not only is the Post Office insolvent, not only is it incompetent (in failing to file proper tax returns for more than a decade – at least), but it is also likely to ask the public – who already pay the Post Office for the services it provides – to cough up the huge shortfalls in cash.
Funny, that. When sub-postmasters were wrongly accused, they were forced to pay the money back, prosecuted and some went to prison. With this firm correctly accused of tax fraud (or so it seems), should we not be seeing executives and accountants forced to repay their ill-gotten gains, prosecuted and imprisoned, rather than be punished for it ourselves?
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Could this be part of a bigger fraud plan to bankrupt it, leading to a closure sale at a massively reduced cheap price. Then friends, and/or sponsors of MPs, parties and ministers step in, buy the stock at lowest price, privatise it, then charge the public exorbitant prices