HMRC announced that they had concluded a deal with the Swiss tax authorities that will enable the UK Exchequer to collect tax in respect of accounts previously hidden from the taxman.

The headline terms are:

• HMRC will receive a one-off amount of CHF500m from the Swiss banks as a down-payment on as yet unidentified liabilities.
• A levy will be made on capital held in Switzerland as at 31 December 2010 of between 19% and 34%.  This is to cover arrears of undeclared tax for the past.
• The rate of the levy will depend on the length of time assets have been held in Switzerland.
• No levy will be applied should all the capital be removed from Switzerland by 31 May 2013.
• A withholding tax will be deducted from UK taxpayers’ income and gains by the Swiss banks: in future, 48% will be applied to income, 40% to dividends and 27% to gains , and the money will be paid to HMRC.
• Account holders’ identities will remain confidential – any taxes will be administered by the Swiss.
• Switzerland will allow 500 information requests in the first year that will enable HMRC to obtain details of named taxpayers, although there are to be no ‘fishing expeditions’.
• There is likely to be an opt-out for non-domiciled taxpayers.

Taxpayers will be able to avoid the levy by disclosing their Swiss accounts to the UK authorities. HMRC have not said anything about the process for doing so. We expect more clarity over the coming weeks.

What also remains unclear is whether the Liechtenstein Disclosure Facility will remain open to holders of Swiss accounts. For this reason alone account holders need to seek urgent advice to decide the best way forward.

More information on the Liechtenstein Disclosure Facility can be found by clicking the link. Alternatively call us in confidence on 0800 032 8374.