Department for Business and Trade (DBT) to cover Post Office’s £104,441,881 bill, after public body falls foul of off-payroll working rules
It has emerged that Post Office Limited (POL) has been issued a £104,441,881 bill, relating to non-compliance under the off-payroll working rules and how the body engaged freelancers and contractors.
This liability is to be subsidised by the DBT, a new document on the government website outlines, because the Post Office is “not in a position to fund it.”
Published on 29th January 2026, the information (here) indicates that the Subsidy Advice Unit (SAU) has accepted a request for a report providing advice to the DBT concerning its proposed subsidy to the Post Office. This includes its handling of the Horizon IT system, along with IR35 compliance. It states:
“In relation to IR35, DBT intends to provide funding of up to £104,441,881 to HMRC to cover POL’s historic IR35 tax liability (and associated corporation tax) with the aim of protecting the post office network, as POL is not in a position to fund it.”
In POL’s 2023/24 annual report, a £72m provision had been made, following HMRC’s review into the organisation’s classification of contractors it engaged. The 2024/25 accounts state that a £101m provision had been made and expect the matter to be settled in 2025/26.
Other public sector bodies – from Defra to the Ministry of Justice, Home Office and Department for Work and Pensions – have disclosed tax liabilities relating to non-compliance in recent years, totalling well over £200m.
Qdos CEO, Seb Maley, said, “This is an astonishing amount – figures that you associate with football transfers, not necessarily IR35. It could easily be the biggest liability issued to any organisation as a result of mismanaging IR35 and the off-payroll rules.
It raises an important question: how have so many public sector bodies got IR35 so wrong? The legislation itself is known for its complexity, but to engage huge numbers of contractors under the wrong employment status is a sign of systematic failure. You are left to wonder if IR35 assessments were carried out. If so, how detailed were they? Was HMRC’s Check Employment Status for Tax – CEST – tool used? And if that’s the case, should businesses rely on it to determine IR35 status? The answer to the final question, in my opinion, is no.
“While in many respects, government-owned bodies have a get out of jail free card when it comes to IR35, private sector firms don’t. The sheer sums involved here are a timely reminder of exactly why complying with these rules is so important.”
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