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Prosecutions for Delinquent Employers

Thursday, November 17, 2016

Joint Media Statement from the Tax Commissioner, the Director of Department of Social Insurance and the Director of Public Prosecutions


The Tax Commissioner, Director of Department of Social Insurance and the Director of Public Prosecutions have held a series of meetings to address the situation of delinquent employers and unpaid Payroll Tax and Social Insurance Contributions. The Tax Commissioner and the Director of Social Insurance will start to forward employer files to the Director of Public Prosecutions for prosecuting employers, companies and individuals, for offences related to delinquent payments pursuant to their respective legislation.

Director of the Department of Social Insurance Karen Daniels stated “In the case of Social Insurance, there is an estimated $14 million of unpaid Social Insurance contributions that has not been paid in by employers. As both employers and employees well know, social insurance contributions provide for an employee’s pension when they reach the age of 65. The amount of the pension is directly linked to the amount paid in over the years. It is a serious breach of the law to not pay in the social insurance contributions deducted from the employee. It is equally serious for the employer to not pay his statutory obligation. Employees of companies and other businesses can check with the Department of Social insurance to ensure their contributions are paid up by contacting the Department at 295-5151.”

Tax Commissioner Lucia Peniston stated “In the case of Payroll Tax, there is an estimated $47 million of unpaid Payroll Tax that has not been paid in by employers. Payroll Tax is used by the Government to provide essential services for Bermuda and its residents such as the Police and Fire Service, maintaining roads and other infrastructure, providing housing, education, health and other social benefits. We are concerned about the behavior of employers that seeks to undermine the Payroll Tax System. Offences include failing to register, failing to file quarterly tax returns, failing to maintain adequate payroll records, obstructing public officers in the execution of his duty under the Taxes Acts and finally, engaging in criminal tax evasion where there is clear intent to defraud the Government through false reporting on their tax returns.”

Ms. Daniels and Ms. Peniston urged delinquent employers to contact their respective departments so that they can bring their accounts to compliant status by arranging payment plans for the arrears where payments are made consistently and timely. They noted that they have utilized the various government entities to recover this debt, in particular the Debt Enforcement Unit of the Attorney General’s Chambers, for the recovery of these unpaid tax arrears. The DEU has actioned on 90% of the accounts referred from the various departments, however there are various limitations. As such, we have decided to pursue these delinquent companies not only in the civil courts but also in the criminal arena, as both the Contributory Pensions Act and the Taxes Management Act allow.   

Director of Public Prosecutions Larry Mussenden stated “I am concerned that employers have conducted themselves in this way and further that they have failed to fully respond to the civil court proceedings. It is of utmost importance that deductions from an employee must be paid to the Social Insurance Department so that an employee at the age of 65 can have the pension to which they are entitled; and it is extremely critical for Payroll Tax to be paid to the Government so that it can provide services. Further, it is unlawful for those employee funds to be used in any other way by the employer. Additionally, every employer must pay their own contributions to the Government. We will review files from the Departments and we will soon prosecute companies and individuals for any relevant offences seeking appropriate sentences and orders for arrears to be paid. However, we do encourage employers to contact the relevant Departments, make payment arrangements and make actual payments.”