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UK Treasure In Switzerland Lower Than Expected

by Ulrika Lomas, Tax-News.com, Brussels

10 July 2013


The Swiss Bankers Association has said that it anticipates that a landmark tax deal with the UK will generate less revenue than originally expected.

The agreement, which entered into force on January 1, subjects accounts held by individual UK taxpayers in Switzerland to an anonymous one-off flat rate tax payment. The account in question must have been open on December 31, 2010 and have remained so on May 31, 2013. The payment settles income tax, capital gains tax, inheritance tax and value-added tax (VAT) liabilities in relation to the funds in the account.

The tax is not applicable if the account holder instructs the bank to disclose details of the account to HM Revenue and Customs (HMRC). If a disclosure is made, HMRC will seek unpaid taxes with the relevant interest and penalties.

According to the Swiss Bankers Association, the implementation of the agreement is proceeding on schedule. However, it also says that the first indications from selected banks show that there are fewer untaxed UK assets in Switzerland than had previously been assumed.

The Association claims that this is largely due to the fact that many clients have resident non-domiciled status. These clients are therefore not liable to UK taxation, and do not fall under the terms of the agreement. In addition, numerous UK clients have already opted for voluntary disclosure, something the Association suggests should come as no surprise, given the Government's plan to adopt a global standard for the automatic exchange of information.

As a result, the Association is warning of the possibility that either none, or only a small part, of the banks' guarantee payment of CHF500m (USD518m) will be recovered.

TAGS: inheritance tax | compliance | tax | tax compliance | tax avoidance | tax incentives | interest | banking | United Kingdom | tax authority | tax planning | Switzerland | HM Revenue and Customs (HMRC) | tax breaks | revenue statistics | penalties | HM Revenue and Customs (HMRC)

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