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18 Oct 2011
NON-DOMS will face a tax charge on the funds they pay HMRC to settle their Swiss tax bill, Accountancy Age has learned.
As part of the Swiss/UK tax agreement, non-domiciled individuals have the choice to: disclose fully their Swiss bank accounts; pay a one-off charge to HMRC and a withholding tax on future income; self-assess how much they owe; or opt-out of the deal. HMRC has said it will pursue those non-doms who make mistakes when choosing the latter two options.
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However, any income remitted to the UK by non-doms faces a tax charge, including the amount in the Swiss accounts used to pay tax bills incurred through the new agreement. So non-doms who choose to pay the one-off charge, or pay the taxman what they owe, face a tax bill for the money they pay to HMRC.
John Cassidy, tax investigations partner at PKF, warned that Non-Doms who hold Swiss accounts will have to be very careful when paying their tax bills. Money remitted from a capital account will not be charged, whereas money taken from a foreign income account will be.
"It is just adding a layer of complexity," he said. "What if the Swiss bank remit it off the wrong account? There has to be instruction about which account to take it out of." The agreement as it stands does not make provision for the taxpayer to decide which account to pay the bills from.
Furthermore, HMRC will be eager to investigate whether the capital funds and income funds have been kept apart adequately. "Accounts tend to get mixed up," Cassidy added. "Remittances have often been made when the client thinks none have been made."
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John Cassidy makes a number of critical comments about the Swiss scheme, rather typical of the parasitic professional adviser to the wealthy.
One aspect of this scheme should be made here loud and clear. This is a scheme designed to persuade people who have hidden their wealth and evaded taxes in the UK. My retort to John and those in the tax and wealth management industry who issue soundbites in the same vein is that as taxpayers (a quaint notion to some of the those with wealth locked away in foreign bank vaults) we are entitled to be critical that the offenders are not being locked up in the clink and their assets seized in penalties.
Posted by: roger, 18 Oct 2011 | 17:32
HMRC / IRS : who gets the cash
Why does the UK persist in the Non Dom status?
Any of these "Non doms" who are US citizens have to pay the tax to the IRS.
They live here, there is a double taxation agreement.
Why does HMRC not have the nouse to abolish Non Dom status and get its hands on the money first?
Posted by: Eleanor, 19 Oct 2011 | 10:44
the reality
With all due respect, Roger should get the facts right. I spend my entire professional life encouraging people with tax irregularities to come forward. The objective is to make sure that they make a full disclosure of all worldwide tax misdemeanours that affect the UK so that matters are properly squared away with HMRC. The withholding tax arrangement only partially achieves that.
Nowhere am I saying that the Swiss Agreement is bad because it means the wealthy will pay more tax, as Roger seems to sugest. The point is that it creates a layer of complexity that makes it harder to persuade tax defaulters to regularise their affars and even harder to (fully) sort out the past with certainty. It also makes it more difficult to calculate and monitor taxable remittances going forward.
Posted by: John cassidy, 21 Oct 2011 | 09:09