My client runs a dog agility club for many years. She came from Switzerland a long time ago but has kept a Swiss bank account. She kept this account but has never transferred any money to or from the account to her UK bank. The money in her account is from inheritance from her parents and sister who passed away. The balance is approximately £ 60,000.
Switzerland and the UK have signed a bilateral tax agreement on co-operation in the areas of taxation which is expected to enter into force on 1.1.2013. The bank account is an seest and the Swiss bank has given her the option to make a one-off payment or voluntary disclosure to the UK tax authorities. What should she do.
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Some quick thoughts.
What is the income arising on the Swiss account annually and her domicile status?
If she's non dom, has made no remittances from the foreign account, and income is <£2k pa then there might not be a problem in the UK re tax. If there is only a problem because income is >£2k pa that might only be for years 2008/09 so long as there were no remittances and she is non dom.
You need to get more information re income arising & to establish domicile, but possibly a disclosure in the UK would not be particularly onerous and significantly less than doing nothing , losing a big chunk of capital for past years catch up and withholding in the future.
You might also need to consider a ML report depending upon what your enquiries turn up.
Professional conduct
I've had a few queries about this from accountant clients. Although I can advise on the consequences of either action, I have to point out to my clients that as soon as the client tells them there is undeclared income, the professional conduct guidelines of their professional body would probably insist that they advise the client to disclose - and cease acting if the client refuses. Plus there is, as ACDWebb says, the MLR issue.
If clients wish to keep these accounts secret, then asking their accountant/tax adviser what to do is probably not the most sensible move!
Obviously that doesn't apply if there is no undeclared income or gains (and I've had one of those) - but then there is even more reason to disclose as failure to do so would mean paying a lump sum from the capital when there would be no UK tax liability!
Cathy