ADVISERS HAVE URGED UK holders of Swiss bank accounts to ensure their compliance with the taxman, after HMRC began sending the first of 6,500 letters warning them of a deadline to settle their liabilities.
Letters sent out from the end of September advise Swiss account holders give recipients six weeks to ensure they are compliant, inviting them to utilise the Liechtenstein Disclosure Facility, which allows Britons with bank accounts in the tiny European principality to settle tax liabilities on favourable terms. Originally due to end to end in March 2015, strong demand for the scheme saw it extended until 5 April 2016.
An accord struck between Britain and Switzerland in April last year forms part of an attempt by the UK to retrieve around £125bn in tax held in the secretive banking system globally, and saw accounts held by individual UK taxpayers in Switzerland subject to a one-off deduction in 2013, as long as the account was open on 31 December 2010 and on 31 May 2013.
Under the scheme, income and gains derived from investments held by UK taxpayers in Swiss banks are subject to a withholding tax, with the rates comparable to the UK top rate of tax and payment satisfying UK liabilities.
The withholding tax does not apply if the account holder authorises disclosure of details of income and gains to the taxman. However, should they fail to disclose their affairs fully and pay, penalties of up to 150% of the amount owed may be imposed.
CIoT European representative and Kinetic Partners member Gary Ashford said: "Many UK residents authorised the release of their data rather than face the one-off payment on 31 May 2013 to regularise the past.
"Some of those will have done that not realising they still needed to make a disclosure to HMRC, probably on a practical level via the LDF, or some who planned to do the LDF and have not got round to it.
"Anyone with Swiss assets needs to double-check they are tax compliant urgently and certainly if they have received a letter from HMRC within the deadline set by the letter. I would also advise those who accepted the one-off payment or those non-doms who opted out to have a review done - as in many cases the one-off payment, or opting out, did not ensure they are tax compliant."
Confirming the move, an HMRC spokesperson said: "The first 6,500 letters were sent on 20 September to people who have chosen to disclose their details to HMRC rather than pay the Swiss withholding tax. We will use this information and the taxpayer's self certification to ensure the right tax is being paid to the UK."
We have had a couple of taxpayers approach us because they have received letters and didn't realise the interest/dividends were taxable in the UK. We believe they are not domciled in the UK even though they have been in the UK a long time, therefore tax is only due from April 2008 when the rules changes.
Posted by: Rebecca Busfield, 08 Oct 2013 | 21:06
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