One of the Post Office compensation schemes for sub-postmasters and postmistresses who are victims of the Horizon scheme is “rigged” against them to minimise payouts, a tax expert is claiming.
The Horizon Shortfall Scheme (HSS) was put in place by the Post Office to compensate postmasters who, while not subject to criminal conviction, made good the apparent losses caused by the faulty Horizon system from their own pockets.
But Dan Neidle, founder of Tax Policy Associates, said: “The Post Office’s compensation scheme is designed to minimise payouts. One postmaster received £15.75. That isn’t a typo.
“I count nine ways the Post Office’s HSS compensation scheme is rigged.
“It’s a scandal, on top of a scandal.”
The Post Office's compensation scheme is designed to minimise payouts. One postmaster received £15.75.
— Dan Neidle (@DanNeidle) January 11, 2024
That isn't a typo.
I count nine ways the Post Office's HSS compensation scheme is rigged:
The experienced tax lawyer named on X, formerly Twitter, nine factors which could minimise compensation sums, explaining further why he believed that to be the case:
1. The Post Office forces postmasters (mostly in their 70s and 80s) to fill in a 14-page form without any help.
2. The postmasters don’t receive legal advice when they complete the form.
“The form itself is 14 pages, plus eligibility criteria, terms of reference, explanatory notes to the terms of reference, seven pages of consequential loss guidance, and six pages of Q&A," he explained.
He added: “I was a senior partner in one of the largest law firms in the world, and I personally wouldn’t complete the form myself – specialist advice is essential.
“We estimate legal fees for completing the form would be c£10k. I doubt any of the postmasters - elderly, often in poverty, vulnerable - can afford that. How much is the Post Office covering? Nothing.
“After the Post Office receives the form, it will send the postmaster a settlement offer. At that point the Post Office will cover some legal costs. But it’s too late – the offer has been framed by the form, and the postmaster received no legal advice in completing the form.”
3. The form is designed to prevent claims for damage to reputation.
“In many cases this was significant - everyone in the village where they lived and worked became convinced that the postmaster was a thief," he said.
He continued: “The design of the form means that claimants are unlikely to realise they can claim for this.
“I doubt many 80-year-old postmasters would know that ‘consequential loss’ includes damage to reputation. But I suppose a particularly assiduous postmaster might go into the detail of Appendix 1, where we see an acknowledgement that damage to reputation can be included....but only where it causes financial loss - which is notoriously hard to quantify.
“I paused when I read this, as I wasn’t aware of a legal principle that a person could recover for damage to reputation only where it causes financial loss.
"I called a few much-more-qualified lawyer contacts. Their answer: there is no such legal principle."
4. The form minimises compensation for stress.
“The postmasters spent years and often decades crushed by the experience they’d been through. It’s a level of stress and unhappiness that most of us can fortunately never imagine," he said.
“The Post Office’s HSS claim form contains no indication that postmasters should be claiming for stress. There is one reference in the Q&A provided by the post office.
“How is an unrepresented postmaster supposed to even realise what this means? Most HSS claimants are receiving no more than £5,000.
“The very top end we’re aware of is one postmaster who had a stroke as a result of the stress of the Post Office’s false allegations, and is receiving £15,000.
“It seems incomprehensible that any postmaster is receiving compensation for stress of less than £33,000."
The form prevents exemplary damages claims.
“When a wrongdoer causes harm intentionally, recklessly, or with gross negligence, then a court can award ‘punitive’ or ‘exemplary’ damages," he stressed.
"This seems a model case where such damages would be awarded - so where on the HSS form is the box for a claimant to assert exemplary damages? Where is that mentioned in the Appendix? Nowhere."
6. They intimidate postmasters into silence.
“Each postmaster receiving an HSS offer was warned by the Post Office that legally they were not permitted to mention the compensation terms to anyone," he said.
7. They run every possible argument to minimise payouts.
“The Post Office’s litigation strategy in the 2010s was described by the Court of Appeal as a 'desire to take every point, regardless of quality or consequences'. The Post Office has never apologised for that approach," he emphasised.
“Today, what I’m hearing from postmasters is that the Post Office is running every possible argument to minimise its payouts. Even against unrepresented postmasters.”
8. They provide a token amount to cover a lawyer reviewing the settlement.
“Once the postmaster sends the form to the Post Office, it responds with a draft settlement agreement, and the postmaster is invited to sign it. At that point, they’ll pay legal fees. But only £1,200," he explained.
“£1,200 of legal advice (for the few people receiving it) would realistically cover a 'sense check' of whether the settlement terms themselves are reasonable. It will not cover an assessment of whether the right amount of compensation is being paid."
9. The Post Office dumped the claimants into a complex tax position.
“The Post Office made no attempt to assist the postmasters’ tax position, and didn’t adjust the compensation upwards to reflect tax," he added.
“So postmasters ended up losing far too much of their compensation in tax – in some cases up to half.”
Responding to the claims, a Post Office spokesperson said: “We have openly and transparently published data on our website about the progress we have made regarding offers and payments to Postmasters that are part of the Horizon Shortfall Scheme.
"All 2,417 claimants have received an offer. Almost £108 million in offers have been made and almost £86 million has been paid to date.
"The scheme is open to late applicants and so far 228 settlement offers have been made. Offers are accessed by an independent panel. Simpler claims were resolved first and as the more complex cases have been settled, six figure payments have been made to eligible claimants.”
“We will also introduce a new upfront payment of £75,000 for the vital GLO group of postmasters,” he added in the Commons.
The GLO Scheme is an ex gratia claims-based scheme for postmasters who were part of the action Alan Bates and Others v Post Office Ltd pursued under a Group Litigation Order, and who do not have a Horizon-related conviction.
Pressed about the GLO scheme, Mr Neidle added: "My thread earlier was about the HSS scheme. The problems are much wider."
Ministers previously said postmasters who had wrongful convictions for theft and false accounting overturned would be offered £600,000 each.
But of the 93 convictions that have been overturned, only 30 of those people have agreed "full and final settlements".
More than £130 million has already been paid out to wronged postmasters, with the Government expecting the final bill could reach £1 billion.
