I have worked at a Royal Mail manual data entry centre several times, typing addresses which the machines cannot read. The rule is that if there is a valid country, it must be sent to that country (it is a legal requirement). Otherwise it gets sent to the Royal Mail Santa office which is in Belfast (who have legal permission to open mail which cannot be delivered) and they will, if possible, send a card in reply. If I recall correctly, their postcode is BT1 1SX.

It is reasonably common to send mail to 'Santa, Lapland' which of course is an area of Finland so must be sent there and they have their own offices who reply. Also Greenland was used I don't know what they did.