The Post Office should “be ended in its current form” and run as a mutual, according to the head of non-profit organisation Tax Policy Associates.

Dan Neidle, tax lawyer and founder of the group, described the Post Office Horizon scandal as “the single greatest challenge to the rule of law”.

The scandal saw more than 700 Post Office branch managers handed criminal convictions after faulty Fujitsu accounting software made it appear as though money was missing.

A public enquiry into the scandal – which has been described as the most widespread miscarriage of justice in UK history – was launched after a series of convictions were overturned after the Post Office settled the cases of 555 claimants.

No privately owned business would ever have survived this, and it’s wrong that the Post Office’s current status means that it has

In a speech to the City of London Solicitors’ Company, Mr Neidle said the Post Office would have collapsed if it were a private business amid the aftermath of the lengthy legal battle.

He said: “The Post Office should itself suffer the ultimate penalty, and be ended in its current form.

“No privately owned business would ever have survived this, and it’s wrong that the Post Office’s current status means that it has.

“The business we all know and rely on should be given to past, current and future postmasters, and run as a mutual, with continuing government support where necessary.

“The remainder of the business should continue for the sole purpose of compensating postmasters.”

In 2021, Post Office chief executive officer Nick Read indicated that the business could seek to share profitability with postmasters, raising speculation it could move towards a form of mutualisation.

“We must strike a new deal with postmasters which recognises that, without them, there is no Post Office,” he said in a speech.

“And, as this partnership takes shape and breeds success over time, we must find a way for them to share, directly, in its profitability.”

It comes after reports that previously convicted postmasters have seen compensation pay-outs heavily reduced, with the Daily Mail reporting how an 80-year-old former postmaster saw his pay-out reduced from around £330,000 to £8,000 due to tax and bankruptcy proceedings.

Mr Neidle claimed that the compensation scheme is “itself a scandal”.

“We need to change the incentives so nothing like this ever happens again, and demonstrate to everybody the consequences of so horrifying an abuse of the legal system,” he added.

A Post Office spokesman said: “We are acutely aware of the severity of the impacts on some postmasters’ lives caused by Post Office’s past failings.

“The scheme’s independent advisory panel of experts assesses individual claims and there are no caps on the compensation offered.

“Offer letters strongly encourage postmasters to take independent legal advice, the cost of which is reimbursed.

“Legal costs are also provided for postmasters who wish to dispute an offer, together with an interim payment of up to 80% of the proposed settlement is available to help alleviate financial pressures.

“Offers totalling around £100 million have been made to all but 16 of the 2,400 applicants in the Scheme, the vast majority of which are already agreed and paid.”

Earlier this year, Mr Neidle also helped to reveal that former Conservative chair Nadhim Zahawi was under investigation over his tax affairs.

The speech is one of a series of talks for the City of London Solicitors’ Company as part of its Food for Thought initiative.