Swiss tax deal: New guidance from HMRC

Kashflow logo
Share this content

Time is running out for Britons with money hidden in Swiss bank accounts.

The UK and Swiss governments have agreed a deal to tax the bank accounts of UK citizens and transfer the money directly to the Treasury without revealing the identity of account holders. The agreement, which is due to start in January, is part of efforts by HMRC to crack down on offshore tax evasion and boost tax receipts. According to a blog post from PKF’s Philip Fisher this week, the agreement only narrowly missed being put to a national referendum because local results from two Swiss cantons were sent by second class post.

With the agreement safely in place, HMRC published a factsheet of answers to commonly asked questions about the tax agreement.

Britons with money overseas who owe tax have options including:

  • Move funds out of Switzerland by 31 May 2013
  • Use the Liechenstein Disclosure Facility, which will run until April 2016
  • Make a voluntary disclosure to HMRC 
  • Pay a flat rate tax for the past and withholding taxes going forward
  • Opt out and claim the remittance basis charge.

Please Login or Register to read the full article

The full article is available to registered members only. To read the rest of this article you’ll need to login or register. Registration is FREE and allows you to view all content, ask questions, comment and much more.

About Nick Huber

Nick Huber profile image

I’m a specialist business journalist and have a particular interest in tax and technology. 


Please login or register to join the discussion.

09th Nov 2012 15:35

Don't you mean....

.... time is running out for the miniscule proportion of fraudsters who avoided umpteen pieces of strongly worded advice, over many years, and yet still left their deposited money in their own name.

I cannot imagine that there are many of those people, as they would have to be dead, brain dead, deaf/dumb/blind or plain stupid.

The Swiss agreement and disclosure process has allowed even the stupid fraudsters to benefit from lower penalties, yet pushed many into improving their asset protection mechanism and even further helped some evade their correct taxes.

Thanks (0)
By HorstK
to Ruddles
16th Nov 2012 16:04

Many, perhaps most...

Many, perhaps most, UK depositors in Swiss banks have small balances (often in connection with mortgages on second homes) that have earned very little interest. Such persons may or may not have earned and reported incidental rental income to HMRC. It may not be feasible for such persons to close the deposit account connected with the mortgage. Allowing it to be reported may give rise to an audit; paying the optional anonymous flat rate out of capital for past "income" is likely to be exorbitant. Many UK and dual residents are closing accounts but making payments from UK accounts using the European payments facility is costly for small remittances. Some I have spoken to are moving their accounts to the Postbank. Of course anybody who was subject to the 35% anticipatory (withholding) tax (i.e. those who did not avail themselves of Swiss banks' facility for untaxed offshore time deposits AND did not file Form 86 for refund of that anticipatory tax) has a problem now. I do not know any wealthy UK "fraudsters" with Swiss assets. I do know a number of small depositors for whom the reporting on SA106 may have been daunting, some of whom (subject to complex rules where funds may or may not have gone back and forth to the UK) may benefit from the de minimus (under £2,000) remittance basis allowance that still exists for non-doms. UK taxpayers, wherever resident, who own Swiss property are subject to Swiss income and wealth tax. Unless they opt for Swiss federal, cantonal and local tax on modified worldwide income they cannot deduct mortgage interest or debt in the calculation. Also, part of Swiss income tax, in the absence of actual rental income, is based (as UK tax once was) on "deemed rent" (a matter of equalising the situation of renters and owners). At least some of it may be creditable against UK tax. Every case seems to be different. There's another glitch: Swiss and UK definition of habitual & ordinary residence (not even getting to "domicile") differ. To be a tax resident of Switzerland one must register with the commune: obviously everyone in employment does that. On the other hand, (retired) persons and passive investors opting to use the NHS (legally or not) will wish to avoid registering with a commune as that means signing up for obligatory medical insurance (see for costs). Registering with a commune implies immediate income and wealth taxation on a worldwide basis. If HMRC considers the taxpayer taxable in the UK (thinking of cases like Robert Gaines-Cooper) then there is the usual treaty analysis of which country gets to tax particular income first.

Thanks (0)
By markfd
11th Nov 2012 09:38

Just to be clear...

...if I read it right, the payment refers to income and gains made on the capital deposited ... but that assumes the capital itself has been correctly subject to tax in the first place ... which seem like a pretty big assumption, and seems to undermine most of the benefit of getting this information.  Income (interest) and gains have been pretty far and few between over the last few years.

Thanks (0)