Will HMRC be fining Santa Claus for PAYE failures this Christmas?
Santa Claus may not feel very jolly if he gets a penalty from HMRC for not paying his UK employer taxes, say leading audit, tax and business advisory firm, Blick Rothenberg.
Robert Salter, a director at the firm, said: “Some international entrepreneurs such as Santa Claus may believe that they don’t have to worry about Pay As You Earn (PAYE) tax withholding. But this mistake could result in a costly penalty as HMRC does not have ‘good will towards all’ when it comes to the failure to operate PAYE correctly.”
He added: “PAYE is the system used by employers to take Income Tax and National Insurance Contributions from employee’s earnings. While Double Tax Treaties may protect international businesses and individuals from being taxed both by their country of origin and by HMRC on their UK earnings, the UK doesn’t have a Double Tax Treaty with Lapland and so PAYE could be due for the elves on a ‘day one’ basis.”
Robert said: “Santa or other entrepreneurs could be on HMRC’s naughty list if he hasn’t been handling his UK PAYE obligations correctly. He cannot pass the blame for this onto his elves, as the employer is normally considered to be responsible for PAYE arrangements in these circumstances.”
He added: “They may also be liable to additional payroll-related obligations such as ensuring the elves are paid the National Minimum Wage. Currently it is £12.21 for those aged 21 or over and will increase to £12.71 in April next year.”
Robert said: “I am sure Santa or other entrepreneurs wouldn’t want to be caught by any fines, and the negative publicity which can arise for major employers such as Santa Inc. if they are not paying their taxes or employees correctly.”