Watchdog clears £142M Post Office subsidy for Horizon fallout and IR35 bill

Steven

Watchdog clears £142M Post Office subsidy for Horizon fallout and IR35 bill

Summary

The Competition and Markets Authority’s Subsidy Advice Unit (SAU) has given conditional advice in favour of a Department for Business and Trade (DBT) plan to provide approximately £141.8 million in subsidies to the Post Office for 2026/27. The package breaks down to about £37.4 million to continue remediation and participation in the ongoing Horizon inquiry, and £104.4 million to cover an IR35-related tax liability linked to staff engaged on remediation work.

The SAU concluded the costs were largely unforeseeable and not solely caused by the Post Office, but it does not itself approve subsidies — it only provides advice to the relevant public authority. The funding request follows ongoing compensation schemes for victims of the Horizon EPOS system failures, which led to wrongful prosecutions of hundreds of subpostmasters between 1999 and 2015. The Post Office has already received government support since 2023 to run its Remediation Unit and Inquiry response teams.

Key Points

  • The SAU advised that a DBT request for £141.8m in total subsidies to the Post Office is justified on the grounds the costs were unforeseeable and not solely caused by the Post Office.
  • £37.4m is proposed to fund continued compensation and participation in the statutory Horizon Inquiry; £104.4m is to cover an IR35 tax liability tied to remediation staff.
  • The SAU provides guidance and assessments but does not itself approve or grant subsidies — final decisions rest with public authorities.
  • Horizon is an EPOS and back-end finance system whose errors led to around 736 wrongful prosecutions; the Post Office (Horizon System) Offences Act 2024 overturned those convictions and several compensation schemes remain active.
  • The IR35 liability was judged to have arisen primarily from staff recruited for the Remediation Unit and was considered unforeseeable by the SAU assessment.

Context and relevance

This is a significant development in a long-running public scandal: it shows the government is still absorbing substantial costs from the Horizon fallout and that contractor tax rules (IR35) can create unexpected liabilities for public bodies running large remediation programmes.

For readers interested in public accountability, IT procurement and governance, or the practical consequences of IR35, this story ties together justice, public finances and the operational costs of correcting a major institutional failure. It also flags a broader policy issue: how taxpayer funds are used to settle both compensation and tax bills stemming from government-related programmes and contracted staff.

Why should I read this?

Quick and blunt: this is where a decades-old IT disaster is still costing real money — and the government is being asked to pick up both compensation and a hefty contractor tax bill. If you care about public spending, tech procurement gone wrong, or how IR35 plays out in practice, this saves you the hassle of digging through the full SAU report.

Author style

Punchy — this isn’t just another finance story. It’s a reminder that systemic tech failures can have long tails: legal, human and fiscal. The sums are big, the injustice was huge, and the decisions now will matter to victims, contractors and taxpayers alike.

Source

Source: https://go.theregister.com/feed/www.theregister.com/2026/03/11/post_office_tax_subsidies/