Pictured: Sarah Moss
The historic tax deal between the UK and Switzerland, which was
agreed in principle, will bring to an end the decades' old trick of
hiding money in secret Swiss bank accounts to evade paying UK tax,
according to PKF Accountants & business advisers.
Sarah Moss, tax partner at PKF, comments: "Although the deal
will not be formally signed for some time, it is already clear that
anyone evading UK tax using a Swiss bank account will eventually
have to pay up - even if they can still choose to remain
anonymous."
The deal will impose a one-off charge of up to 34% on the
capital held by UK residents in Swiss accounts and an on-going
charge on new income and gains that they generate. However, it is
not an amnesty - HMRC will still be able to investigate individuals
it suspects of evading tax using Swiss accounts in cases where
funds have left the account over the years, which is, of course,
not unusual. Account holders who don't want to suffer an automatic
charge should make a full disclosure of the accounts and any
irregularities to HMRC. A more drastic measure is to close their
Swiss accounts but, when funds are moved out of Switzerland, the
Swiss bank will make a report to the UK authorities on where the
funds were sent. Individuals who do not need to make a disclosure
because they are not domiciled in the UK can opt out of the one-off
charge, but will need to do a lot of homework before doing so
otherwise HMRC will come down very harshly on them - inadvertent
remittances over the years are not uncommon.
John Cassidy, tax investigation and dispute resolution partner
comments, "Broadly speaking accountholders have three options:
• Do nothing - your account will remain secret but you will
lose up to over a third of your money and still face all the risks
of a tax investigation by HMRC on funds that have left the
account.
• Come clean on past tax irregularities to the UK
authorities - in many cases you can bring your tax affairs fully up
to date at a relatively low cost using the Liechtenstein Disclosure
Facility; often this will cost less than the 34% levied by a Swiss
bank if you do nothing.
• Move to another tax haven - this is will result in HMRC
finding out that you once had a Swiss account and trigger HMRC to
investigate your affairs. It will usually issue an assessment of
the tax it thinks you owe plus a penalty of up to 200% of the tax
due - leaving you with the tricky task of proving that the figures
are wrong. In the worst cases, tax evaders can face criminal
investigation - with HMRC staffing up and aiming to increase
prosecutions five-fold, this is more likely than ever
before.
"Unless you are prepared to flee the country for good, all UK
residents who hold a Swiss bank account have to think carefully
about this change. If you have been hiding money in a Swiss
account, the best option is to take expert advice on the most
cost-effective way to regularise your finances."
For more information about PKF, please visit their website here:
www.pkf.co.uk