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This publication is available at https://www.gov.uk/government/publications/get-help-with-self-assessment-filing-if-youre-a-sub-postmaster/horizon-shortfall-scheme-claimants-and-the-31-january-2024-self-assessment-filing-deadline
1. Tax Treatment of Horizon Shortfall Scheme compensation payments
Postmasters in the Horizon Shortfall Scheme (HSS) who do not receive their top-up payment in good time to file their Self Assessment tax return before 31 January 2024 will not have to pay any late filing or late payment penalty or interest. A dedicated team stand ready to provide postmasters with any support required.
The Horizon Shortfall Scheme was put in place by Post Office Ltd to compensate postmasters who, while not subject to criminal conviction, made good the apparent losses caused by the Horizon system from their own pockets. Its design meant that the original HSS compensation payments are subject to Income Tax and National Insurance Contributions (NICs). Postmasters who receive compensation under the HSS may therefore have to file a Self Assessment tax return and pay Income Tax and NICs on these payments.
On 19 June 2023 the Government announced that postmasters in the HSS will receive top-up payments to ensure that the amount of compensation they receive is not unduly reduced by tax. Postmasters in the HSS will also receive £300 to pay for independent advice on filing their tax return. Not all top-up payments and tax advice grants have yet been made by the Post Office.
HMRC is committed to supporting HSS postmasters to file their tax return and pay any tax and NICs due. HSS postmasters can use the information below for guidance.
Payments in the Overturned Conviction (formerly known as the Overturned Historical Conviction scheme) and Group Litigation Order schemes were made exempt of Income Tax and NICs and recipients do not have to pay any tax on these payments or report them to HMRC.
2. Guidance for Postmasters in the Horizon Shortfall Scheme (HSS)
Postmasters in the HSS who need support can call a dedicated HMRC helpline on 0300 322 9625, open Monday to Friday 8am to 6pm, for help from our specialist team.
If you received Horizon Shortfall Scheme compensation between 6 April 2022 and 5 April 2023 you may have to pay Income Tax and NICs. However, HMRC recognise that some postmasters have not yet received the top-up payments from Post Office Ltd, which are intended to ensure that the amount of compensation HSS postmasters receive is not unduly reduced by tax.
2.1 If you’ve already received a notice to file a 2022-2023 Self Assessment tax return
If you have already received a notice to file a 2022-23 Self Assessment tax return from HMRC, the deadline for filing that return online is 31 January 2024. HMRC understand that you may not be able to file your return or pay the tax due by that date. If you have not received your top-up payment and tax advice grant from the Post Office in good time to file your return and pay your tax by 31 January, we will not charge any interest or penalties if you file your return or pay your tax late as a result. If you are not certain what to show in your return about the compensation payment then please speak to our dedicated support team.
2.2 If you’ve not received a notice to file a 2022-2023 Self Assessment tax return
If you received HSS compensation payments between 6 April 2022 and 5 April 2023 and have not yet been asked by HMRC to file a Self Assessment tax return by 31 January 2024 then please speak to our dedicated support team.
3. Getting help
HMRC has taken steps to identify those receiving relevant HSS payments and will aim to prevent any penalty notices being issued or interest being charged. However, if you do receive a penalty notice or interest charge, you can speak to our dedicated support team on 0300 322 9625 and we will remove the penalties and interest.
Postmasters who are unable to pay their tax liability in full will be able to set up a payment plan to pay in affordable monthly payments. Payment plans are flexible and based on individual income and expenditure. Anyone who is worried about paying their tax liabilities, or about their National Insurance credits record, should contact our dedicated support team to discuss their options.
Post Office Ltd provide funding of up to £300 for independent tax advice to help postmasters in the HSS scheme to file their Self Assessment tax return. We would encourage HSS claimants to take advantage of this.
4. Background to the HSS compensation payments
Due to the design of the scheme, the original compensation payments in the Horizon Shortfall Scheme are not exempt from Income Tax or National Insurance Contributions (NICs). Postmasters who receive HSS compensation may be liable to pay Income Tax on these payments. However, the top-up payments announced in June 2023 are exempt from tax. These extra payments are to compensate postmasters for any undue reductions to the amount of compensation caused by the tax treatment of the scheme.
5. Horizon data and Self Assessment
HMRC has not received or used bulk Horizon data from the Post Office to calculate tax or select returns for further checks — and we’re not aware of any cases where we have relied upon Horizon data.
We recognise that postmasters may have used Horizon data in their Self Assessment tax returns.
If you think you have paid the wrong tax because of Horizon data, contact our dedicated support team and we will look into your case.
If you are a postmaster affected by Horizon issues and have queries about your tax, contact our dedicated support team. This includes any queries about missing the filing deadline if this applies to you.
Telephone:
0300 322 9625
Opening hours are:
Monday to Friday: 8am to 6pm
