The Swiss-UK tax agreement was signed in London on Thursday 6 October2011.
Under the terms of the agreement UK residents with accounts open on 31 December 2010 and 31 May 2013 will pay a flat rate tax of between 19% and 34% of the value of the asset. This will cover the income tax, capital gains tax, inheritance tax and VAT due.
Going forward-UK residents will need to declare the offshore funds or suffer a withholding tax very similar to the top rate of UK tax of up to 48%.
What can be done now?
Individuals with undisclosed Swiss assets should consider utilising the Liechtenstein Disclosure Facility (LDF) now to bring their affairs up to date rather than wait for the flat rate tax to be deducted after 31 May 2013. There are a number of benefits from using the LDF, not least that the overall amount payable to HMRC will in most cases be significantly less than the flat rate tax payable under the Swiss UK tax deal. Furthermore, the LDF provides the client with a lot more certainty and flexibility on how to structure their financial affairs going forward.
Other provisions of Swiss-UK tax deal
There are other provisions within the agreement to ensure that UK residents pay tax on their Swiss assets, where appropriate:
- UK Res Non Doms will need to pay the Remittance Basis Charge and arrange for a UK tax professional to certify their domicile status;
- The Swiss Govt will provide the UK with details of the funds moved outside of Switzerland following the announcement;
- HMRC will be able to ask the Swiss authorities to confirm whether a UK individual has a Swiss bank account;
- Any person who has failed to disclose their Swiss assets to HMRC when challenged cannot clear any past liabilities under the agreement;
- People already under investigation cannot use the agreement to clear their tax liabilities for the past;
- Persons involved in criminality cannot use the agreement to clear their tax liabilities for the past; and
- If a Swiss bank assists their client in avoiding the withholding tax the bank will be held liable for the tax lost.
What can Gabelle do for you and your clients
Gabelle specialises in advising and representing clients with undisclosed overseas assets who wish to bring their affairs up to date. Please contact John Hood on 020 7182 4747 or via email on email@example.com a free confidential discussion.