The Post Office’s incompetent compensation process left thousands of postmasters with large tax liabilities. When we revealed this, the Government forced the Post Office to fix the situation – but the Post Office did so far too slowly. New Freedom of Information Act disclosures reveal that, when we identified this new problem, the Post Office’s only concern was the PR impact. And the Post Office continues to cover-up the reasons for its failures.
The Post Office scandal has had three separate phases, with three separate scandals. First, from 1999 to 2015, persecuting and prosecuting postmasters for “shortfalls” which it knew were caused by bugs in its Horizon system, and withholding evidence which would have demonstrated their innocence. Second, from 2017 to 2021, aggressively and improperly litigating to cover-up its failures, when it knew a core plank of its defence was a lie. Third, from 2021, designing and running compensation schemes to ensure it paid its victims as little as possible.
The Post Office says that it’s changed and is now dedicated to righting the wrongs of the past. But the evidence shows that it continues to prioritise covering-up its misdeeds over doing the right thing.
The incompetence
One small scandal within the compensation scandal was that, when the Post Office designed its HSS compensation scheme, it gave no thought to the tax position of the postmasters. The result was that many saw almost half of their compensation lost to tax. Any competent tax adviser would have identified this issue and suggested solutions; the Post Office either didn’t obtain proper advice, or ignored it. It was incompetent.
When we identified the issue, the Government intervened and, in June 2023, required the Post Office to make “top-up” payments to postmasters to cover their tax liability, and provide them with a letter explaining their tax position. It then changed the law to ensure the “top-up” payments would not themselves be taxable. Everything had been done to fix the Post Office’s mess, and all that the Post Office had to do was run the calculations and get the letters out.
So it was incomprehensible that, by the end of 2023, with the self assessment deadline looming, the Post Office had only made a fraction of the top-up payments. 1,100 postmasters hadn’t received a letter or top-up payment, and were left with a £10k tax bill they’d have to pay without any help or assistance.
This should not have been a difficult task. The Post Office knew what the HSS compensation payments were, and what years they covered. So calculating the amount of the top-up payment should have been a spreadsheet exercise. I’ve spoken to accountants familiar with this kind of exercise (from other compensation schemes), and they think a small team could have calculated the appropriate top-ups in a few weeks.1A few would have been trickier, for example where the postmaster operated their business through a partnership or company; but reasonable simplifying assumptions could have been made.
However the Post Office was unable to do this after six months. More incompetence.
The sole focus was on the PR
How did Nick Read, the Post Office CEO, react when we reported that the Post Office had incompetently left 1,200 postmasters with a serious tax problem? Did he demand an explanation for this from his team? Did he ensure a solution was prioritised?
Thanks to a Freedom of Information Act application from Christopher Head, we know the answer to these questions.
There is no sign of Read being surprised by the Post Office’s slow response, much less being disturbed by it. Instead, the sole focus of Read and his team was on the public relations impact. Apparently my twitter thread identifying the issue wasn’t very “helpful”:
The team’s subsequent response showed no attempt to understand, or even recognise, the actual criticism: that the Post Office’s response was unjustifiably slow, and had – completely unnecessarily – left 1,100 postmasters in a difficult position:
I don’t know if this is because they didn’t understand the issue, or were shielding Read from it. Either way, this looks like a dysfunctional management team.
And so, in the end, Read thought it was all okay, because there wasn’t much media pickup of the story:
Read had zero interest in the fundamental question: how come the Post Office had left 1,100 postmasters hanging?
The full set of documents is here.
The cover-up
I tried to establish how the Post Office had got this so wrong, and failed to achieve in six months what a competent team of accountants would have achieved in a few weeks. The obvious answer is that they didn’t have enough staff engaged on the task – so I filed a Freedom of Information Act request asking how many staff had been involved.
The Post Office is refusing to tell me:
Needless to say, the idea that telling me the number of staff involved in a project would enable those staff to be identified is daft. It’s a cover-up, and not a very good one. (You can see the Post Office’s complete response here.)
I asked for a review of this decision immediately, on 21 February. The Post Office should have responded within 20 business days. They haven’t responded at all, not even to acknowledge receipt.
The Post Office hasn’t changed. Its only interest is in preserving the little that’s left of its own reputation.
- 1A few would have been trickier, for example where the postmaster operated their business through a partnership or company; but reasonable simplifying assumptions could have been made.
13 responses to “The Post Office’s top priority is covering-up its mistakes”
Well done Dan.
The fact that the PO say in their letter to you that the number involved in the project was “….less than 10.” supports your suggestion that they did not have enough people on the project.
Yet again, great work, and I agree with Rebecca, I think I could do the work in a few days. I’m not sure why you redacted the email addresses, they deserve every angry email they get
I’m not involved with the PO in any way, but their determination to elongate every procedure, without thought to the victims, borders on illegality and certainly is immoral.
A thousand thanks to you,Dan, for your determination action to see justice served for the victims.
It’s like peeling back the layers of an onion, the deceit, obfusfaction and lying from those at the top of the PO management chain and down through the ranks. Thank goodness we have Dan doing this work. Please keep going Dan. You are doing a great service to the public
And to be honest, I could have done the calculations in a few days if I had been given the data on HSS payments. And that would include issuing the ‘offer letters’ – which would have included how to report and pay the tax.
And even when they did issue top up payments, the letter was so complex and impenetrable that those who received them thought they were a tax demand, not an offer of further money. Postmasters had to ‘accept’ the offer before the funds were made available and some were very reluctant until we (my band of volunteers) intervened.
Superb coverage, as always, by Dan Neidle.
Dan – thank you so much for your clear, coherent and trenchant observations of this ghastly mess. Strength to your arm.
Sir Wyn Williams who is heading the PO enquiry should be made aware of this Dan.
I think he was wide boundaries in this matter so he should be informed.
Have you considered a press release of your correspondence with the PO and a full report?
I think they would be very interested in this.
Good work Dan, always a plesure.
The Secretary of State with ultimate responsibility for the Post Office is Kemi Badenoch. This needs to be brought to her attention and an answer should be demanded within 5 working days. If she can find time to fire Staunton – albeit after the press was briefed – and then defend her decision, then she should have time to address an issue that further harms the welfare of sub postmasters.
The PO has no shred of good reputation left. All now know how a deliberate and prolonged campaign of lying and obfuscation was entered into at the most senior level. All those who are now proven to have known and supported this campaign, past and present, must now be brought to justice. That includes POL senior management, Fujitsu, legal council, and not least the government who ignored what was happening.
The attitude of the Post Office remains shockingly callous, with little regard for the people it has incorrectly persecuted.
As you say, their focus is on their own reputation. They do not seem to realise that they have no reputation left.
Some organisations are so poor, so dysfunctional, that they reach a point where the only solution left to address their failings is to destroy the organisation and build something new and better in its place. I think the Post Office has reached that point.
It is clearly a bureaucratic monster that is hiding behind the post office enquiry . Good work Dan as clearly was a flawed from a tax perspective. What also struck me is how little compassion the PO management have for the victims. This lack of compassion needs addressed and no way can the Post Office remain as is. They can change the top positions if the like but the culture is flawed.