This ground-breaking agreement has been signed and is expected to take effect from January 2013. It will mean that UK residents can retrospectively regulate the tax position on their existing banking relationships in Switzerland by either making a one-off tax payment or disclosing their accounts. Future investment income and capital gains of British bank clients in Switzerland will then be subject to withholding tax, and the amount collected will be transferred to the British authorities by Switzerland. In addition, mutual market access for financial services will be improved.
There will be a one-off tax payment option in 2013 of between 19% and 34%, where the account is still open on 31 May 2013, and that will settle all taxes in relation to the funds in the account. The alternative to facing the deduction is to instruct the bank to disclose details of the account to HMRC, in which case HMRC will seek unpaid taxes plus interest and penalties.
There will be a new withholding tax from 2013 ranging from 27% to 40% where the account holder has not previously advised HMRC about the assets and has not authorised full disclosure.
Plenty of food for thought by individuals who do have undeclared funds in Switzerland, and we are ready to advise on the options available to regularise the position.