 Tough choices for Swiss account holders
25 August 2011: The historic tax deal between the UK and Switzerland, which was agreed in principle yesterday, will bring to an end the decades’ old trick of hiding money in secret Swiss bank accounts to evade paying UK tax, according to PKF Accountants & business advisers.
John Cassidy, tax investigation and dispute resolution partner at PKF, comments: “Although the deal will not be formally signed for some time, it is already clear that anyone evading UK tax using a Swiss bank account will eventually have to pay up – even if they can still choose to remain anonymous.”
The deal will impose a one-off charge of up to 34% on the capital held by UK residents in Swiss accounts and an on-going charge on new income and gains that they generate. However, it is not an amnesty – HMRC will still be able to investigate individuals it suspects of evading tax using Swiss accounts in cases where funds have left the account over the years, which is, of course, not unusual. Account holders who don’t want to suffer an automatic charge should make a full disclosure of the accounts and any irregularities to HMRC. A more drastic measure is to close their Swiss accounts but, when funds are moved out of Switzerland, the Swiss bank will make a report to the UK authorities on where the funds were sent. Individuals who do not need to make a disclosure because they are not domiciled in the UK can opt out of the one-off charge, but will need to do a lot of homework before doing so otherwise HMRC will come down very harshly on them – inadvertent remittances over the years are not uncommon.
John Cassidy, comments, “Broadly speaking accountholders have three options:
- Do nothing – your account will remain secret but you will lose up to over a third of your money and still face all the risks of a tax investigation by HMRC on funds that have left the account.
- Come clean on past tax irregularities to the UK authorities – in many cases you can bring your tax affairs fully up to date at a relatively low cost using the Liechtenstein Disclosure Facility; often this will cost less than the 34% levied by a Swiss bank if you do nothing.
- Move to another tax haven - this is will result in HMRC finding out that you once had a Swiss account and trigger HMRC to investigate your affairs. It will usually issue an assessment of the tax it thinks you owe plus a penalty of up to 200% of the tax due - leaving you with the tricky task of proving that the figures are wrong. In the worst cases, tax evaders can face criminal investigation – with HMRC staffing up and aiming to increase prosecutions five-fold, this is more likely than ever before.
“Unless you are prepared to flee the country for good, all UK residents who hold a Swiss bank account have to think carefully about this change. If you have been hiding money in a Swiss account, the best option is to take expert advice on the most cost-effective way to regularise your finances.”
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For further information, please contact: Andy Konieczko, 020 7065 0537, andrew.konieczko@uk.pkf.com or Jane Soares, 020 7065 0135, jane.soares@uk.pkf.com
Notes to Editors:
1. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
2. PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF (Isle of Man) LLC is a limited liability company registered in the Isle of Man. PKF (Channel Islands) Limited is incorporated in Guernsey.
3. PKF (UK) LLP is a member firm of the PKF International Limited (PKFI) network of legally independent member firms. The PKFI member firms have around 2,200 partners and more than 21,000 staff in around 125 countries.
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