Pictured: Iain Macleod
British residents who have evaded paying UK tax on funds held in
Swiss banks could now be caught out by the tax man following news
of an agreement signed with Switzerland.
A former tax inspector for 26 years and head of the Tax
Investigations team at EDF Tax, Iain Macleod says: "The agreement,
together with a new power given to HMRC to find out about Swiss
bank accounts held by UK residents, offers an excellent solution to
a long standing problem. It will be hard for those affected to hide
from the tax man and HMRC expects to recover billions."
Determined evaders, says Iain, will immediately move their funds
elsewhere, but under the new agreement Switzerland will collect
data on the destination of funds withdrawn from the country and
then share that data with the UK.
He continues: "Others will choose to accept the rates of tax
that will be applied to their accounts, although they would be
advised to first check whether it is worth using the Liechtenstein
Disclosure Facility (LDF), which remains open till 2015. It
maybe that the excellent LDF terms, if available in the
individual's case, will produce a better result than accepting the
one off deduction of between 19% and 34% that the Swiss banks will
take from accounts which are open on 31 May 2013."
Still to be ratified and not in force until 2013, the UK and
Swiss agreement (signed 6 October) introduces a new withholding tax
of 48% on investment income and 27% on gains for those who have not
previously told HM Revenue & Customs (HMRC) about assets, and
will ensure the future taxation of UK residents with funds in Swiss
bank accounts. The new charges will not apply if the taxpayer
authorises a full disclosure of their affairs to HMRC.
For people with Swiss bank accounts who have paid UK tax,
nothing should change. It would be sensible, recommends Iain, for
them to contact the bank and provide what evidence is required to
show that their UK tax returns are correct and up to date.