Under the agreement, which was formerly signed by the two governments in August this year, a one-off payment is to be taken from the Swiss accounts held by UK taxpayers and paid anonymously to HM Revenue & Customs to clear legacy tax liabilities connected to the Swiss assets.
Those who make this one-off payment are understood to be protected from prosecution by HMRC if they are caught by a subsequent tax investigation.
However, law firm McGrigors said that HMRC have since released a policy letter which states that prosecutions may occur where the individual has committed a tax offence that is potentially punishable by more than two years imprisonment, even if an individual has made a payment under the scheme. McGrigors points out that in fact all tax offences carry such a punishment, therefore anyone using the Swiss Treaty would be open for prosecution.
Jason Collins, partner, of McGrigors said: “The Side Letter is gobbledygook. Any individual planning to use the Swiss agreement needs to understand that there is still a risk of prosecution if HMRC ever catches up with them, even though that person has cleared their tax liabilities through the one-off payment.”
“HMRC’s Side Letter as it stands does not give any protection at all. I cannot believe that this was the Government’s intention, so they really need to come out and clarify the position.”