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Tax issues for Santa to ponder

Santa's VAT adviser, who wishes to remain anonymous, says she has been pondering some key issues:

First things first, is Santa a taxable person? He is only active once a year (though it is a busy night and he visits a lot of countries!). Also his activity is carried out very regularly every year (he never misses). But is he carrying out an economic activity? Is he giving the presents away or are the mince pies and brandy left out for him (and the carrots for the reindeer) non monetary consideration (not to mention the requirement that the children have to have been good – which is surely priceless).

Is the letter to Santa a contract and what happens if one party (the child) fails to meet its part of the bargain (the aforementioned ‘being good’ bit). If the gifts left for each child in a household cost less than £50 and there is no consideration provided, can Santa claim the input tax on these without there being an output tax liability?

How should he value the work of the elves in the workshop that produce the gifts – and are they his employees or are they self-employed? There is no doubt a range of other issues to consider as regards Santa’s direct tax affairs and how he can afford to carry on year after year with no money coming in (unless you count the fees for all those shopping centre stints – but is that really him??).

Is Santa’s sleigh an airplane used by an airline operating for reward chiefly on international routes? Can the reindeer food be zero rated because the reindeer are working animals? He is supplying delivered wrapped goods, which all start their journey at the North Pole, (non EU) and don’t go through Customs, so what is the place of supply, and is he making a single supply or is the wrapping separate?

If it is separate how do you apportion the non monetary consideration (assuming there is any)?

 Lots to think about!

[A version of this letter has appeared elsewhere beforehand but I cannot trace the original]
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