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HMRC internal manual

Business Income Manual

Specific deductions: losses: sub-postmasters cash deficiencies

Normally allow any net deficiency

In computing the profits of a business which includes the remuneration of a sub-postmaster (i.e. where the post office is carried on in conjunction with a business, see BIM66301), you may allow a deduction for any net cash deficiency (that is, the balance of deficiencies over excesses) which they are required to make good to the Post Office.

You should normally accept the claimant’s statement of the amount of the deficiency, any inquiry being confined to cases in which, for example, the sum involved is appreciable in relation to the amount of the remuneration. In exceptional cases, for example where the cash deficiency arises from the sub-postmaster diverting funds to their own pockets, then no deduction is allowed.

As to the corresponding allowance where the remuneration is taxed as employment income, see EIM68210.