Swiss banks have started writing to their UK account-holders, as required under the UK-Swiss Tax Agreement, which is due to come into force on 1 January 2013.
Account-holders are required to notify the bank how they wish to be treated under the Agreement in relation to the historic position, and also future obligations. The default position is that the bank will apply a one-off charge (at a rate of between 21% and 41%) to the bank account on 31 May 2013 to regularise the historic position. Going forward there will be a withholding tax applied (the rate depends on the source) to income and gains. The alternative is the disclosure option, whereby the bank passes the account-holder’s details, and other information, to HMRC, via the Swiss tax authority. Individuals who are not domiciled in the UK, and have been taxed on the remittance basis for 2010/11 and/or 2011/12 have further options.
Account-holders need to carefully consider their options before responding, as the one-off charge under the Agreement may not give them the most favourable outcome. With banks imposing a tight deadline for responses, advisers, and their clients, need to move quickly, and obtain specialist advice to establish the client’s options. In many cases, this is likely to include the Liechtenstein Disclosure Facility (LDF).
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