Loss of sub-post office

The taxpayer was a sub-postmaster who received a compensation payment of £74 177 in 2008/09 as a result of the closure of the post office she ran.

She did not declare the payment in her tax return for the year. HMRC opened an enquiry into the return and concluded the amount was chargeable to tax. A statutory review upheld the department’s decision.

The taxpayer appealed to the First-tier Tribunal arguing the payment was compensation for loss of her business and was partly capital partly revenue.

She was not an employee of Post Office Ltd but was contracted to the company to provide its services. She had bought the business for £50 000 and had spent another £24 850 on improving the premises and discharging an obligation on a long-term lease when the post office closed down.

The Revenue argued that while not an employee of Post...