Reports surfaced earlier this week suggesting that British citizens may be forced to pay a 50% levy on assets stashed covertly in Switzerland following an agreement between the Swiss and British government to legitimise undeclared funds which is expected to be unveiled later this month.
But accountants have raised questions about the practicality of such an arrangement. George Bull, head of tax at Baker Tilly, questioned the impact of the tax on Britons who held disclosed assets in Switzerland.
“While HMRC is likely to reach an arrangement with the Swiss banks and authorities to recover tax on Swiss bank accounts, the details are by no means clear,” he said.
“It has been suggested that the arrangement will take the form of a payment from Switzerland to HMRC based on income earned on deposits in Switzerland, but that on its own would open up the possibility of penal additional taxation of UK residents whose affairs are already in order.”
Provision would be required to ensure that UK taxpayers who had declared Swiss income to the revenue were either not subjected to deduction, he said. Alternatively, if they were subjected to the deduction there would need to be a system for crediting them, he added.
“It would be reasonable to expect that UK resident depositors should be exempted from deduction if they satisfy the Swiss authorities that their income has been assessed correctly.”
“For other depositors Switzerland need not tell HMRC anything but instead can provide them with statements confirming the amounts deducted.”
He added that the terms of previous offshore disclosure facilities, including for Leichtenstein, had required complete disclosure of all undeclared income and gains and he questioned the repercussions for this jurisdiction.
“It is not stretching the imagination to suspect that HMRC is likely to offer a wider facility to accompany the recently extended Liechtenstein disclosure facility. At the same time Liechtenstein may be wondering if the disclosure facility allowed to its depositors was that generous after all. HMRC will need to be careful to maintain the goodwill, or at least the cooperation, of the Liechtenstein authorities in future too.”
