Post Office couple in tax row
IT'S NOT often members of the public take on government departments but, for Sue and Basil Bimson, they have been given no choice due to the hard line instigated by the Post Office, Inland Revenue and, ultimately, the Labour-led administration at Westminster.
In 2007, the Bimsons moved to Palnure from Lowton St Mary's, in Warrington, Lancashire, where for five years they had been running a post office, a position that should have left them with a comfortable retirement fund, instead of the financial hardship in which they now find themselves.
When the local post office in their home town closed in 1999, the couple were asked by the locals if they would take it on, despite having no previous experience.
They agreed and set the wheels in motion, attending the various meetings and interviews arranged by the Post Office to ensure they were suitable people to take on the franchise.
The couple had originally been running a butcher's shop and it was agreed with the Post Office that the Bimsons would convert the premises at their own expense.
But the 25,000 cost was only the beginning of their financial outlay. To enable them to take on the licence, the couple had to buy the franchise for 21,958.
On top of that, they then had to find money to buy the screens and other equipment needed before the branch could open. The only equipment provided free of charge by the Post Office was the safe and date stamps.
Basil had to agree to give up a quarter of his first year's pay as a bond - presumably, he and Sue thought, to cover any irregularities that might occur in the accounts, although no clear reason was ever given.
Initially Sue and Basil led quite comfortable lives and worked hard to build the business. The hours were long and there was no time for holidays, but the monthly wage they received from the post office, along with the commissions they earned from its services, came to a liveable amount.
In 2003, however, standard postal services were rapidly being dropped, post offices were closing, and Sue and Basil started to worry.
A year later, the couple were informed their post office was under review for closing the following January but that they would be compensated.
At the time, there were two different methods the Post Office used for arriving at a closure figure for compensation.
One was known as the standard compensation. This was classed as the equivalent of 28 month's salary. However, it was only beneficial for those postmasters who had been running a branch for five years or more. As the Bimsons had been there for just under five years, the figure offered was a "derisory" 14,000 - considerably less than their investment.
The other way was the business-value method. For the Bimsons to qualify, they had to produce every invoice and bill detailing their expenditure on the initial conversion.
Under this method, they could also claim the difference if the value of the property before the conversion was less than the value of the property after the conversion to a Post Office.
Fortunately the property had been valued with a view to selling prior to the conversion. The difference in value was 40,000, incorporated into the final figure for compensation, bringing the total due to 132,000.
The required paperwork was posted off to a Post Office department in Leeds dealing with the closures. Months later, however, the Bimsons still had not heard an update. Basil followed up, only to be told the paperwork had not been received and would have to be re-submitted.
Sue duly sent the papers over, this time by fax, and within minutes a telephone call from the Post Office re-invention team was received, informing them that a decision had been reached on the maximum payment - equivalent to 28 months' salary.
"It was very odd," Basil said, "how they could reach that decision within five minutes of receiving the paperwork they had supposedly lost in the first place.
"They wouldn't even have time to look over the first invoice."
After coming under pressure, the Bimsons agreed to accept the offer, even though the amount covered only a fraction of their initial investment.
The accounts were checked prior to closure and, as there were no anomalies, the Bimsons expected the return of their initial bond. But that never happened, and no-one dealing with the closure could explain why it wasn't returned.
"Basically it amounts to theft," Basil said.
The Bimsons received the closure payment on the day their post office was closed. It was paid by BACS into the business account, as were all other payments from the Post Office. The final paperwork and taxes due were sent off by the accountant, along with a note explaining the origin of the money. That, as far as the Bimsons and their accountant were aware, was the end of the matter.
Two years on, however, the Bimsons came under investigation.
According to the Inland Revenue, because of changes made they owed 15,000 in tax and charges would be added daily until it was paid.
"Apparently the compensation payment had been moved by the Inland Revenue from the business account to my personal income, under the directives of the Department of Trade and Industry and Post Office, thus creating a huge tax bill," Basil said.
The accountant and the Bimsons have appealed the matter.
"It's like saying one day we are an orange and the next day a lemon," Sue said. "How can we be self-employed one day and employed the next? The tax office has completely ignored the huge costs we incurred in the conversion and decommissioning the post office."
It is made all the more complicated by the different set of rules that apply to post offices. According to the law, Basil was employed for National Insurance purposes, but self-employed for tax purposes. And the accountant has always submitted accounts as a limited company, which has always been accepted by the tax office, so why should this have changed?
The 15,000 was immediately paid to avoid the daily interest charges being added, but the Bimsons now have a fight on their hands to reclaim what they feel has wrongfully been taken.
There is also some doubt as to the legalities of the methods used behind these requests for payment. It appears the tax office was not consulted by the Department of Trade and Industry when it decided that compensation payments came under personal income.
A further kick in the teeth came last September. The Bimsons received yet another tax bill for 1,150.90, for interest on the 15,000 from when their post office was closed until the date the tax office sent the bill. So far, the Bimsons haven't paid it.
"We couldn't pay it anyway, between the Post Office and the Inland Revenue, we've been sucked dry," Basil said.
A tribunal has been set for March 29 to consider whether the Inland Revenue decision should be reversed.
Ultimately, this case comes down to the courts deciding Basil's status during the time he was running the post office.
In past legal cases, the status of a sub-postmaster has always been deemed self-employed as technically they are a franchisee. Current rules state that self-employed people are exempt from PAYE tax.
Should the tribunal rule against the Bimsons, the next step would be to take the case to the High Court. The cost would be prohibitive, unless the Bimsons can find others who have had the same experience and would be willing to share the cost of engaging a barrister.
According to Basil: "We are aware that there are other sub-postmasters who are in the same position as we are, and we need them to come forward.
"If we could come together and fight this as a group, we would have more chance of making people sit up and listen."
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Tuesday 07 February 2012
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