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1. Tax relief for compensation scheme payments

(1) FA 2020 is amended as follows.

(2) After paragraph 5 of Schedule 15 (tax relief for scheme payments) insert鈥�

鈥淧ART 2

CORPORATION TAX AND OTHER RELATED RELIEF

Introductory

6. This Part of this Schedule provides for the following鈥�

(a) an exemption from corporation tax for relevant compensation payments, and
(b) an exemption from income tax and capital gains tax for relevant onward payments.

Relevant compensation payments

7. In this Part of this Schedule 鈥渞elevant compensation payment鈥� means a payment made to a company under鈥�

(a) the GLO Compensation Scheme, or
(b) the Horizon Shortfall Scheme.

Relevant onward payments

8. (1) For the purposes of this Part of this Schedule a payment is a 鈥渞elevant onward payment鈥� if or to the extent that鈥�

(a) the payment is made by a company to which a relevant compensation payment was made,
(b) the payment is to an individual and鈥�

(i) the individual is or was a director or employee of the company, or
(ii) the payment is a distribution by the company to shareholders, and

(c) it is reasonable to conclude from the circumstances that the payment is made by the company to the individual for the purpose of passing on all or part of the compensation payment mentioned in paragraph (a) to the individual.

(2) But where the relevant compensation payment mentioned in sub-paragraph (1)(a) was made under the Horizon Shortfall Scheme, the payment is to be treated as falling within sub-paragraph (1) only so far as鈥�

(a) it forms part of a larger payment made under that scheme (whether or not that part is paid at the same time), and
(b) that part of the payment is made for the purpose of compensating an individual for any increased liability to income tax arising in connection with the making of the relevant compensation payment.

Exemption from corporation tax

9. (1) No liability to corporation tax arises in respect of a relevant compensation payment.

(2) The following are to be ignored for all other corporation tax purposes鈥�

(a) the receipt by a company of a relevant compensation payment;
(b) the making by a company of a relevant onward payment.

(3) This paragraph has effect in the case of relevant compensation payments and relevant onward payments whenever the payments concerned are made.

Exemption from income tax and capital gains tax

10. (1) Paragraph 3(1) and (2) (exemption from income tax) applies to a relevant onward payment as it applies to a qualifying payment.

(2) Paragraph 4(1) and (2) (exemption from capital gains tax) applies to a relevant onward payment as it applies to a qualifying payment.

(3) Sub-paragraph (1) has effect whenever the relevant onward payments concerned are received.

(4) Sub-paragraph (2) has effect whenever the disposals concerned are made. Interpretation

Interpretation

11. In this Part of this Schedule鈥�

鈥淕LO Compensation Scheme鈥� means the scheme announced by His Majesty鈥檚 Government on 22 March 2022 with the objective of ensuring that persons who were party to a claim against Post Office Limited in respect of the Horizon system that was subject to a group litigation order have access to compensation for losses related to that system;

鈥淗orizon Shortfall Scheme鈥� means the scheme established by Post Office Limited which鈥�

(a) was previously known as the Historical Shortfall Scheme, and
(b) provides for access to compensation to persons affected by the Horizon system shortfalls;

鈥渢he Horizon system鈥� means previous versions of the computer system used by Post Office Limited known as Horizon (and sometimes referred to as Legacy Horizon, Horizon Online or HNG-X);

鈥淧ost Office Limited鈥� means the private company limited by shares with the company number 02154540 whose registered office is 100 Wood Street, London EC2V 7ER.鈥�

(3) In consequence of the amendment made by subsection (2)鈥�

(a) in section 102鈥�

(i) omit 鈥渁nd鈥� after paragraph (b), and
(ii) after that paragraph insert鈥�

鈥�(ba) payments made under or otherwise referable to the GLO Compensation Scheme and the Horizon Shortfall Scheme, and鈥�;

(b) before paragraph 1 of Schedule 15 (and the italic heading before it) insert鈥�

鈥淧ART 1

INCOME TAX AND OTHER RELATED RELIEF鈥�;

(c) in each of the following provisions of Schedule 15, before 鈥淪chedule鈥� insert 鈥渢his Part of鈥濃��

(i) paragraph 1(1);
(ii) paragraph 1(2);
(iii) paragraph 2(6).鈥�