The agreement between the two countries will come into force on 1 January 2013.
Individuals who have undisclosed tax liabilities relating to monies in Swiss accounts should be considering how best to regularise the position. You should consider the various options available under the UK / Swiss Tax Agreement but also the alternative of disclosing under HMRC’s current Liechtenstein Disclosure Facility (LDF).
The “one-off” deduction under the UK / Swiss agreement is more favourable, in terms of the amount which has to be paid, as opposed to submitting a disclosure under the terms of the LDF. Under the Swiss scheme, the starting point for the complex calculation is the bank balance at 31 December 2010. If funds have been withdrawn from the account prior to this date or even utilised to pay bank charges, these funds will not be considered “cleaned” by HMRC and further tax may be due in respect of them. Similarly any income or gains generated within the account since 1 January 2011 will not be “cleaned” by the deduction and may lead to further tax liabilities. By contrast, the LDF offers a route whereby all funds can be legitimised and subsequently repatriated to the UK without any further complications. The LDF now has a higher entry point in that you need a bank account with a high percentage of your funds.