Sub Postmasters VAT assessment

Sub Postmasters VAT assessment

HMRC used Post Office Horizon Data for VAT Penalties and VAT Assessments

HM Revenue and Customs (HMRC) used Post Office data to claim that a Sub-Postmaster had been dishonest. The Sub-Postmaster was prosecuted by the Post Office and convicted of fraud in respect of takings accounted for through the now discredited “Horizon” computer system. We understand that the criminal conviction is currently under appeal.

The Horizon data used by the Post Offuce has now been discredited.  A Sub postmasters VAT assessment and any associated VAT penalty would thus seem to be based on discredited information which may make lead to the withdrawal of any VAT assessment.

The Sub postmasters VAT assessments totalled over £59,000 and VAT penalties in excess of £39,000 based, at least in part, on information supplied by the Post Office. The VAT assessments and VAT penalties were appealed to the Tax Tribunal. Mr Andrew Young of Counsel, who we have instructed on numerous VAT appeals over the years, represented the Appellant.

The matter has now been settled in favour of the Sub Postmaster VAT position. Almost at the door of the Court HMRC have agreed to pay the litigation costs of the Tribunal hearing on an indemnity basis.

Other Sub Postmasters VAT assessments and VAT penalties based on Horizon Data

We recommend that urgent consideration should be given to any other sub postmaster VAT assessments and VAT penalties. There are normally strict time limits for challenging VAT assessments and VAT penalties but it may be possible to have time limits extended in appropriate circumstances. In the circumstances of Sub Postmasters VAT assessments would HMRC and/or the Tax Tribunal grant any required extension of time? 

The VAT liability of income received by a Sub postmaster can be quite complex.  Numerous Sub postmasters operate other businesses such as the supply of stationery, lottery tickets and other retails items alongside the Post Office supplies.  As not all the supplies made by a sub postmaster are liable to VAT at the standard rate consideration should be made to the correct VAT rate.

Questions to consider would seem to include:

  • has any such VAT assessment been correctly made;
  • has the VAT assessment been correctly calculated; and
  • is the VAT assessment capricious or vindictive?

Any VAT penalty in this situation would be based on the VAT assessment

To discuss your case please call us on 0121 663 1986 and speak to one of our Directors Peter Smallwood