Pictured: Jeff Millington, director of BTG Tax in
Birmingham
Experts at the UK's largest independent tax consultancy are
calling for more details of the Swiss Accord deal announced by UK
and Swiss authorities on Wednesday (August 24).
Jeff Millington, director of BTG Tax in Birmingham, said that at
first reading the innovative agreement appeared to provide an
opportunity for UK taxpayers to put right their tax affairs in
respect of assets held in Swiss bank accounts.
Under the agreement, UK taxpayers account for any past assets
held in Switzerland by paying an anonymous maximum flat rate
deduction of 34 per cent of assets (subject to statutory
limitations), although it is expected this will be an effective
rate of 20 - 25 per cent.
They may also be able to make a voluntary disclosure to the UK
authorities and pay their tax arrears with no penalty or inform the
Swiss Bank of their already declared assets and the Bank will
notify the UK authorities.
For those individuals hoping to keep any assets in Switzerland
in the future, the agreement will allow for an anonymous
withholding tax to be paid, at 27 per cent, 40 per cent or 48 per
cent depending on the nature of the income or gains.
Alternatively, the individual will be able to inform the Swiss
Bank to notify the UK authorities of the income and pay tax as
normal.
Mr Millington said: "UK taxpayers with Swiss assets who proceed
with one of the options detailed can be confident that after the
agreement is finally signed there will be no criminal prosecution
action against them unless the UK authorities already hold evidence
that might result in criminal prosecution.
"Those who do not proceed with the above options will have to
move their funds out of Switzerland no later than May 31,
2013.
"This agreement applies to assets held in Switzerland only - it
does not resolve the issues of tax evaded assets elsewhere in the
world.
"The UK Treasury announcement indicates that anyone coming
forward voluntarily will pay tax, interest and a penalty, although
no percentage for the penalty has been indicated. This begs the
question - why would anyone choose a voluntary route?
"There are still question marks hanging over whether interest
will be charged on past tax or if the 'flat rate' is applied
against deposits or withdrawals or only against balances at year
ends."
Mr Millington pointed out that non domiciles were specifically
excluded from the agreement, but asked who then determined a
person's domicile status
"This is a complicated and time consuming issue at the best of
times. The Liechtenstein Disclosure Facility offers a resolution to
this problem which is a major benefit to anyone with an
undetermined domicile status."
He said that the announcement failed to fully explain the risk
of a criminal prosecution:
"The UK authorities already hold vast quantities of bank
information on UK taxpayers obtained when Section 20(8A)/Schedule
36 notices were served on 308 banks. The authorities also hold and
are using data which was stolen from certain Swiss institutions and
passed legally to HMRC, so a prosecution risk prior to 2013
remains a possibility."
Despite the announcements, matters remain unclear and uncertain.
The deadline date is currently set at January 2013 but Mr
Millington asked if anyone with offshore accounts could afford to
wait that long:
"HMRC is sticking to their promise and are cracking down on
those with offshore accounts. For many of these individuals, the
Liechtenstein Disclosure Facility still looks like a far better
prospect," he said.
"Those with offshore accounts should act now and have their
affairs reviewed by an expert to ascertain which is the best option
for them."
For more information about BTG Tax, please visit their website
here: www.btg-tax.com