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UK Swiss Tax Agreement

Following a long period of negotiation, between the UK and Swiss governments, a ground breaking deal was signed on 6 October 2011 in relation to tackling offshore tax evasion by those UK resident individuals who have sought to hide behind Switzerland’s banking secrecy laws to evade UK taxes. The original terms were revised and updated by an exchange of letters on 18 April 2012.

The Agreement comes into force on 1 January 2013. Individuals with a UK address holding a Swiss bank account or investments there will have three options to consider in relation to the past:

1. Pay a one Off Levy 

This will be calculated on the value of investments (not real estate, boats or chattels) held at 31 December 2010. The levy will be between 21% and 41% and will settle all past tax liabilities (including interest and penalties). Under this option an individual may preserve their anonymity.

2. Disclose 

The individual can authorise the bank to disclose details of the account / investments to HM Revenue & Customs (HMRC). In these circumstances, the levy will not be applied. HMRC will then seek unpaid taxes as well as interest and penalties on a normal or strict basis.

3. Move funds to another jurisdiction 

The individual can move funds to another jurisdiction, but subject to when this takes place the Swiss bank will only have to notify HMRC to where funds have been transferred. 

From 1 January 2013 if individuals wish to keep their anomymity within the Swiss banking regime, they will also have to suffer a withholding tax of 48% on their investment income, 27% on gains and 40% on dividends.

There are special rules for non-UK domiciliaries who can opt out of the one off levy, although heavier penalties will be applied where taxable remittances are subsequently discovered. They will, however, still be subject to the withholding tax. 

Individuals who hold a Swiss bank account or who hold investments in a Swiss structure, may be able to take advantage of HMRC’s Liechtenstein Disclosure Facility (LDF) in order to disclose any UK tax irregularities they may have. We have further detailed information relating to the LDF.
 

Call our helpline 020 7842 7200 for a free no obligation discussion or email investigations@crowecw.co.uk. Alternatively, please complete our enquiry form and one of our team will contact you.