The UK's Competition and Markets Authority has 30 days to assess a £246 million subsidy request for Post Office Limited, split between ongoing Horizon scandal remediation (£142M) and historic IR35 tax liabilities (£104M).
The numbers matter. This represents roughly 28% of POL's FY2025 revenue. The Horizon allocation includes up to £37.4M for the 2026/27 financial year to continue compensation payments and support the ongoing statutory inquiry.
The IR35 portion covers off-payroll tax liabilities, the same contractor tax rules that have caused headaches across UK government IT projects for years. POL isn't the only public body struggling with IR35 compliance, but it's rare to see the bill land this publicly.
The pattern is clear
This is the latest in a series of state subsidies to POL since 2023. The government-owned company lacks funds to cover redress for the roughly 900 subpostmasters wrongfully prosecuted due to bugs in Fujitsu's Horizon EPOS system, deployed in the 1990s and upgraded twice.
The 2019 High Court group action established that Horizon had "bugs, errors and defects." That case settled for £58M, though claimants netted just £12M after legal costs. The Horizon Shortfall Scheme closed to new applications on 31 January 2026.
What enterprise tech leaders should note
Three things matter here for CTOs and CIOs:
First, the cost of legacy system failures doesn't stop at remediation. POL's bill now includes legal, inquiry, and tax compliance costs years after the technical issues were confirmed.
Second, vendor accountability remains murky. Fujitsu built and maintained Horizon, but POL is carrying the financial and reputational damage.
Third, IR35 continues to create complexity for enterprise IT, particularly in government sectors. The rules target tax avoidance but often penalize legitimate contractor arrangements. If your organization relies on contractors, this is a reminder that classification matters and the costs of getting it wrong compound over time.
Tax expert Dan Neidle has questioned whether POL's practice of deducting redress payments from profits to reduce corporation tax is legal, noting it could risk insolvency. POL maintains it remains solvent with government support.
The CMA's Subsidy Advice Unit will report within 30 days. We'll see if the subsidy clears state aid scrutiny under post-Brexit UK rules.