UK Swiss tax agreement

The UK Swiss tax cooperation agreement empowered HMRC to collect tax from previously-hidden accounts. Find out what this means for you by speaking with our team of tax risk and investigation experts.

The UK Swiss tax cooperation agreement came into force on 1st January 2013. The agreement enables HMRC to collect tax in respect of accounts previously hidden from the taxman. HMRC expected to raise £5bn extra in tax revenue under the agreement, although it now seems that this will prove optimistic.

The headline terms are:

  • early in 2013 HMRC received a one-off amount of CHF500m (equivalent to £342m) from the Swiss banks, as a down-payment on as yet unidentified liabilities;
  • at 31 May 2013 a levy was made on capital held in Switzerland as at 31 December 2010. This was to cover arrears of undeclared tax for the past;
  • the rate of the levy would be between 19 per cent and 34 per cent, dependent on the length of time assets have been held in Switzerland;
  • no levy was applied if all the capital had been removed from Switzerland by 31 May 2013;
  • from 1 June 2013, a withholding tax will be deducted from UK taxpayers’ income and gains by the Swiss banks: 48 per cent will be applied to income, 40 per cent to dividends and 27 per cent to gains, and this will be paid to HMRC;
  • account holders’ identities will remain confidential – any taxes will be administered by the Swiss. However Switzerland will allow 500 information requests in the first year that will enable HMRC to obtain details of named taxpayers, although there are to be no fishing expeditions; and
  • there is a form of opt-out for non-domiciled taxpayers.

Taxpayers who authorised disclosure of their Swiss accounts avoided having to suffer the levy and the withholding tax in respect of future income and capital gains.

Since September 2013, HMRC has sent a series of letters to individuals who have authorised disclosure of their Swiss accounts. The letters ask the individual to sign one of three very wide-ranging certificates, one confirming that there are no tax issues and the others accepting that there are tax irregularities which the individual wants to put right, either by using, up to 31 December 2015, the Liechtenstein Disclosure Facility (LDF), or by simply coming forward voluntarily to HMRC. As criminal investigation and prosecution may result if false statements are made, individuals who receive a letter need to consider their response very carefully.

If you are an account holder who is concerned about the need to regularise your affairs, we recommend that you seek urgent advice to decide the best way forward.

Call us in confidence on +44 (0)800 032 8374.

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