|As reported by Grant Thornton, the HM Treasury has announced that it has signed an agreement with the Swiss Government that will mean Britons who hold funds in Swiss accounts will pay tax at 27% – 48% on their Swiss income and gains.This historic step taken by the Swiss and UK authorities follows an earlier agreement with the Liechtenstein Government, which resulted in the Liechtenstein Disclosure Facility (LDF) being offered to UK taxpayers. From 2013 the Swiss banks will withhold an amount of 27 – 48% of the annual income or gains on the account every year and send it to HM Revenue and Customs (HMRC). The identity of the individual account holder will not be revealed. These charges will not apply if the taxpayer authorises disclosure of their Swiss accounts to HMRC.
They will also pay a one off catch up payment to cover income tax, capital gains tax, inheritance tax and VAT liabilities in respect of the funds in the account of between 19% and 34% of the balance depending on how long the account has been held, again, on a no names basis. This charge will apply where the account was held on 31 December 2010 and remains open on 31 May 2013. Once again, these charges will not apply if the taxpayer authorises disclosure of their Swiss accounts to HMRC.
Unlike recent HMRC initiatives however, this is not an amnesty, and any taxpayers with accounts in Switzerland who are later picked up for enquiry by HMRC will still be subject to penalties of up to 150% of the tax due and interest. As part of the agreement HMRC will be able to investigate alleged tax evasion by requesting the Swiss banking details of named British taxpayers. UK taxpayers will be contacted by their Swiss financial institution in due course.
Those taxpayers affected should now consider whether it would be more beneficial to come forward under the LDF, which offers reduced penalties and a guarantee of non-prosecution. A disclosure under the LDF would also allow taxpayers to legitimise their foreign assets and use them in the UK.