On 13/01/2024 13:43, Simon Parker wrote:
On 13/01/2024 08:48, Jethro_uk wrote:
Seems their tax skills are on a par with their IT chops
https://www.bbc.co.uk/news/business-67964064
The Post Office may have underpaid more than £100m in tax while
overpaying its senior executives, according to tax experts.
Dan Neidle of Tax Policy Associates says the Post Office paid less tax by
deducting payments to victims of the Horizon scandal from its profits.
This could count as a possible breach of tax law, according to experts.
Two comments on this, firstly the specific then the general.
What I find difficult to accept about this situation is that the Post
Office has two systems for reporting profit:
In the first system they deducted the compensation payments from their headline profit figure and in the second they didn't.
The first system should be used to calculate performance related bonuses
as the compensation payments are a liability incurred as a direct
consequence of the way the Post Office was run by those in charge and
this should be reflected in the bonuses paid. The second system should
be used for calculating their tax liability as it is a long-established
and well-known principle that costs related to legal penalties and fines
are not generally tax deductible and therefore do not reduce one's CT liability.
It seems that the Post Office used the figures the opposite way around thereby inflating their bonuses whilst simultaneously reducing their tax liability, very conveniently for them.
I suggest that the most reasonable way of resolving this issue is to recalculate the bonuses paid in the "correct" manner and that the Post
Office then claws back any over-payments which can be used to pay HMRC
some of what it is owed.
Hardly surprising. "Creative accounting" is all the rage these days.
Large corporates are pretty much run to maximise the bonuses of those
right at the top whilst simultaneously screwing the people that they
employ (aka minimising overheads).
As to your general question, "Could it get any worse?", I fear the
answer is "Yes".
Given that they are now technically insolvent it could get a *lot*
worse. Will HMRC have their pound of flesh? Their senior accountant
should be done for false accounting - he must surely know the rules.
The Post Office has admitted that it introduced a pilot scheme for
Horizon in the north-east of England where the system was rolled out to around 300 post offices during 1995 and 1996.
Some of those participating in the pilot reported that the system was
faulty and that it was misreporting figures.
Hardly surprising given that it was riddled with bugs. Some (most?) of
them have likely been fixed by now since software is one of the few
things that improves the longer that it is used (assuming good practice
bug fixing which in this instance is by no means a given).
It is as recent as December that it has emerged that at least two branch managers taking part in the Horizon pilot had been prosecuted. It is thought there could be dozens more such prosecutions which may now be
unsafe with those convicted being able to claim compensation.
At no point during this process which has been going on for decades did anyone from the Post Office think to mention the pilot scheme which had
also resulted in prosecutions.
Worse - they have been setting heavyweight lawyers to threaten anyone
who even started to sniff at this story as BBC Panorama found out. The technical press were onto it in 2009 - it now 2024 and SFA has happened.
It took the ITV drama and a public outcry to galvanise people into action.
So, the compensation figure is almost certainly likely to be higher as
those that participated in the pilot scheme that were prosecuted will
also require compensating.
Similarly, as it was a pilot scheme, in which errors may be expected,
why did nobody stop to double-check that everything was working as
expected rather than adopting the default position that the post office manager was corrupt and had stolen the money?
It seems that they genuinely believed the Horizon system was infallible
even though the evidence (and more than one software audit) showed
otherwise. They were obsessed with punishing the innocent - firing and discrediting anyone brave enough to point out that the Emperor had no
clothes. I reckon some of those "discredited" but actually correct
technical experts would like their day in court with the tables turned.
Incidentally I note that last night the Minister for The Post Office
said that he thought those responsible should be jailed:
https://www.bbc.co.uk/news/uk-67962473
Isn't he speaking out of turn as someone in such a position of authority
over the Post Office - judge, jury and executioner? Although I agree
with his sentiments I can't see it ever happening and I don't think he
should have said that. The defendants may be able to claim as a result
that they won't get a fair trial (but then neither did the postmasters)
and in this particular case two wrongs might just make a right!
--
Martin Brown
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