By Robert Lee (Tax-news.com)
The UK revenue agency, HMRC, has issued a final warning to Swiss bank account holders to pay taxes due or face investigation. Penalties could be as high as 150%.Under a new tax agreement between the UK and Switzerland, accounts held by individual UK taxpayers in Switzerland will be subject to an anonymous one-off tax payment in 2013, providing that the account in question was open on December 31, 2010 and remains open on May 31, 2013.
The UK's revenue agency has issued a warning to Swiss bank account holders that they have one final chance to pay any tax due, or face investigation.
HM Revenue and Customs (HMRC) is in the process of sending letters to the account holders to warn them that, if they ignore a time-limited opportunity, they could face penalties which, in certain circumstances, could reach up to 150% of the taxes owed. This is the third time such reminders have been sent to UK taxpayers found to have accounts with Swiss banks.
A landmark tax agreement between the UK and Switzerland will enter into force on January 1, 2013. Under the terms of the treaty, accounts held by individual UK taxpayers in Switzerland will be subject to an anonymous one-off tax payment in 2013, providing that the account in question was open on December 31, 2010 and remains open on May 31, 2013.
The payment will settle income tax, capital gains tax, inheritance tax and value-added tax (VAT) liabilities in relation to the funds in the account. However, the tax will not be applied if the account holder instructs the bank to disclose details of the account to HMRC. If a disclosure is made, HMRC will then seek unpaid taxes with the relevant interest and penalties.
The deal will also see the introduction of a new withholding tax on income and gains arising on investments held by individual UK taxpayers in Swiss banks from January 1. Tax will be charged at a rate between 19% and 34%, dependent on the assets in question and determined by both the duration of the client-bank relationship and the initial and final amount of capital held in the account. Payment will satisfy UK tax liabilities on the income and gains, but will not apply if a disclosure is made.
Jennie Granger, HMRC’s Director General Enforcement and Compliance, said: "We are working carefully through the offshore data we have received and this work has so far brought in GBP100m (USD162m) in unpaid tax that would otherwise have remained lost to the UK." Granger anticipates that the Swiss deal will generate an additional GBP5bn in tax revenue for the UK.