A groundbreaking amnesty deal between the UK and Switzerland is likely to be announced shortly with David Hartnett, HMRC Permanent Secretary for Tax, telling a group of tax investigation professionals to expect the deal in May or June.
The agreement seeks to legitimise the undeclared assets Britons have in Swiss bank accounts and is a result of the UK’s crackdown on tax evasion, as well as the intense pressure Switzerland has been under from various Governments regarding bank secrecy laws and tax evasion.
The deal will see Britons pay a once-off retrospective levy, in recognition of past unpaid taxes, with any further money being moved from Switzerland to the UK incurring a 50% withholding tax (WHT), which will be taken by Swiss authorities and passed to the UK. The 50% rate is equivalent to the highest rate of income tax in the UK – Switzerland having previously indicated it wished WHT rates on accounts held by foreigners to be similar to the rates that would have been paid in their home country.
The deal is expected to raised £3bn by 2014 for the British treasury.
The deal has been in the pipeline since the UK started introducing amnesties. However it has sparked complaints from Liechtenstein, which claims that talk of the impending Swiss deal has reduced interest in the Liechtenstein Disclosure Facility (LDF).
While the exact terms of the Swiss deal are unknown, it is likely to be similar to the LDF, although potentially more attractive, given that more UK money lies in Swiss accounts than Liechtenstein accounts.
The LDF offers immunity from prosecution, as well as legitimising the undisclosed assets, and there is talk of extending the cut off date to 2016, in recognition that the uncertainty over the Swiss deal may have prevented some investors coming forward.
Don't 'Wait and See'
However, the thousands of investors with undeclared assets in Switzerland, who have been considering their options ever since stolen bank data was handed over, are being warned against a ‘wait and see’ attitude, and to take the LDF while they can, as it is likely the HMRC will be looking at accounts prior to a Swiss deal being confirmed.
Visit our resources centre to download one of the 11 whitepapers currently available.