Tax – Penalties for Failure to Forward PAYE

Abstract

A note on a case involving imposition of penalties for a mistaken failure by an employer to account to the Inland Revenue Department for Pay As You Earn or PAYE deductions from employee remuneration. Instead the sole shareholder/director of the company paid it in a lump sum at the end of the year. Although the Commissioner can ultimately hold the employee responsible for PAYE, the relative severity of the penalty imposed on the employer in this case reflects the policy of the PAYE system whereby the primary burden and responsibility to pay tax on wages is placed on the employer. Furthermore, failure to account for PAYE tax is tantamount to theft, since once employees have earned their wages property in the remuneration passes from the employer.

Keywords: Tax administration, penalties, PAYE

JEL Classification: K34