Expert Comments On New Agreement
As part of HMRC’s ongoing attempt to tax money held in offshore bank accounts, the UK has agreed a deal with the Swiss government which will seek to tax money held in Swiss bank accounts. The secrecy afforded by the law in Switzerland to UK citizens with bank accounts will be protected as account holders’ identities will remain undisclosed.
The deal includes a significant one-off deduction to be applied in 2013 to untaxed monies, the product of which will be transferred directly to the Treasury. The rate will be between 19% and 34% depending on the length of time the funds have been held in the account. It will be applied to all forms of past tax liabilities. Not every UK tax payer will be eligible.
Thereafter an annual “withholding” tax of between 27% (on gains) and 48% (on investment income) will be applied depending upon how any taxable income has arisen. The deal will also grant the UK the right to request further banking details of up to 500 individuals annually after 2013.
The full treaty text has not yet been published but is expected within the coming months, once the agreement is ratified and formally signed.
The Treasury described the deal as “historic” and expects it to secure “billions of pounds of unpaid tax”. The deal intends that UK citizens will be able to avoid the new tax scheme by making voluntary full disclosure to HMRC.
A similar accord was reached with Liechtenstein in 2009. Further details of the Liechtenstein Disclosure Facility (“LDF”), which remains open, can be found here.
Maurice Martin, tax investigations partner at Irwin Mitchell, said, “The existing LDF arrangements may be more suitable for UK individuals when compared to the publicised terms of the Swiss deal.
"A careful review of individual circumstances is strongly recommended in order to consider, for example, avoiding prosecution, incurring a lower penalty or being exposed to a shorter period of enquiry.”
Should you have queries regarding please contact Maurice on 020 7421 3883.