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.
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.”