Introduction »

Swiss rolled-over

In a deal made between HMRC and the Swiss authorities, the funds of UK taxpayers in Switzerland will face a one-off deduction of between 19% and 34% to settle past tax liabilities.

From 2013, a new withholding tax of 48% on investment income and 27% on gains applying to those who have not previously told HMRC about these assets will be charged. However, the new charges will not apply if the taxpayer authorises a full disclosure of their affairs to HMRC.

The agreement also includes the following:

• an anti-abuse clause to prevent Swiss banks promoting avoidance
• a programme of audits, overseen by a new UK-Swiss joint commission, to ensure that banks are complying with their obligations
• that Switzerland will collect data on the destination of funds withdrawn from the country following the announcement of this agreement and will pass this to the UK.

However, the deal is not the end of matters as it does not necessarily cover all past tax arrears. Effectively, people have four options:

• make a full disclosure to HMRC but there is no guarantee of non prosecution and no mention of the level of penalties that may be due
• retain anonymity and authorise the ‘one-off payment’. The threat of discovery by HMRC and potential future prosecution remains
• disclose via the Liechtenstein facility, which does protect from prosecution, or
• withdraw all funds from Switzerland but risk prosecution and penalties of up to 200% of the tax if invested in certain other overseas jurisdictions.

For any help in this area, please get in touch with your normal contact.

Introduction »