Secret Swiss Bank Accounts

A landmark agreement between the UK and Switzerland governments, which will come into force in 2013, will see UK taxpayers who hold Swiss bank accounts subjected to a one-off levy ranging between 19 – 34% to settle tax arrears.

The rate will be dependent on the number of years of investment and the nature of account movement and will only affect individuals with an account that was open on 31st December 2010 and remains so at 31st May 2013.

Those account holders that instruct their bank to disclose their account details to HMRC will not have the rate applied but rather the UK tax authorities will seek unpaid taxes together with the appropriate interest and penalties.

The treaty is aimed at tackling offshore tax evasion and as a gesture of goodwill Switzerland’s financial institutions are to make an advance payment to the UK of 500M Swiss francs (£384M). It is believed that the deal could raise in the region of £5 billion a year for the Treasury.

From 2013, a withholding tax of 48% will apply to interest and 27% on gains. It is also understood that dividends will attract a 40% charge although this was not included in any official announcement. These rates are intended to fall just below the UK’s top rates which are designed to take account of the earlier deduction rather than having to wait for payment later on under self assessment.

The agreement also includes provisions for information sharing beyond that of the current UK-Switzerland double taxation agreement. Each year HMRC will be able to request and obtain full details of Swiss bank accounts held by up to 500 UK taxpayers.

It may be that many will now be prompted to use HMRC’s ongoing Lichtenstein disclosure facility (LDF). Although the LDF requires individuals to voluntarily relinquish their anonymity, it only charges a fixed penalty of 10% on undeclared income. 

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