If you worked in any of these countries, you could be due a Tax Refund

Swiss Close to Agreement with HMRC on Offshore Accounts

#TravelTipsUK #TaxTipsUK

I like to write in a shroud of secrecy because I have to keep finding ways to scare myself - M. Night Shyamalan.

Switzerland, that bastion of banking secrecy and supposed facilitator of all things "tax evasion", is apparently close to signing a deal with the UK which could have a significant impact for UK residents/nationals holding assets offshore.

The purported deal is understood by sources close to the process to include:

  • A withholding tax (WHT) of between 25%-35% on any income generated by the assets held in Swiss banks which are owned by British residents/nationals;
  • A further levy on any untaxed income generated by Swiss accounts going back 6 years; and,
  • An information exchange agreement allowing the Swiss to disclose information to HMRC but only where HMRC can show that the Swiss accounts are being used to evade UK tax.

One of the key points, and something which is likely to draw fire from commentators, is that the WHT will be wired to HM Treasury in omnibus; there will be no disclosure to HMRC who the WHT has been taken from and so those using Swiss accounts to evade tax will retain their anonymity. What's more, if those evading tax (and there will be some) are 50% taxpayers in the UK, a WHT at 25% will mean they are still only paying half of what they would pay if they were fully compliant with UK legislation.

But as Bill Dodwell, Senior Partner at Deloitte, pointed out: "You have to be pragmatic. This will raise a lot of money and bring a lot of people back into the UK tax system." Initial estimates indicate that as much as £6billion could be collected.

One interesting point which should have those evaders running scared is the information exchange. Why? Well, it's expected that the information exchange can only happen if HMRC can demonstrate that Swiss accounts are being used to evade UK tax. Normally this would be quite a difficult hurdle. That is of course, until you bear in mind that a while back HMRC came into possession of a list of 15,000 HNWs who have accounts with HSBC Switzerland. Exactly how this happened is not known for certain but it was reported that the account details were allegedly stolen by a HSBC employee who passed them to the French authorities who in turn passed them to HMRC. It is also worth remembering that in early 2010 there were rumours of HMRC attempting to purchase a separate stolen disc of information which was reported to have been purchased from the thief by the German Authorities. Whether this is true I don't know but HMRC have precedent here as they purchased stolen information on Lichtenstein account holders in 2008.

So the point? Well that hurdle for information exchange isn't too high if HMRC have your name and account details on a disc and can see you haven't declared the income on your UK Tax Return. Running scared indeed!