Partner Article

HMRC’s Swiss Tax initiative - running out of steam?

Last week HMRC issued a batch of letters to individuals affected by the UK/Switzerland tax agreement.

It is clear that information from Swiss Banks is already being sent to the UK and the understanding is that further batches of letters will be dispatched in the run up to Christmas.

The letters ask the individual to sign one of three very wide-ranging certificates, one confirming that there are no tax issues and the others accepting that there are tax irregularities which the individual wants to put right, either by using the Liechtenstein Disclosure Facility (LDF), or by simply coming forward voluntarily to HMRC.

As criminal investigation and prosecutions may result if false statements are made, individuals who receive a letter need to consider their response very carefully.

The Swiss initiative was aimed at people with an interest in Swiss assets or investments who may have taken advantage of Switzerland’s previous regime of banking secrecy.

Bank account holders with UK addresses were contacted by their Swiss financial institution over the past year and asked whether they wanted to remain anonymous and suffer a historic one-off (and future withholding) tax charge or alternatively, permit the bank to disclose the existence of the assets or investments to HMRC.

It seems that the majority of last week’s letters are aimed at those who were happy to accept disclosure.

HMRC’s expectation was that £3.2 billion would be raised as a result of the agreement with Switzerland.

However, recent figures published by the department indicate that only £747 million has so far been passed to the UK by the Swiss banks. Whilst future LDF and other disclosures (and withholding tax deductions) will need to be taken into account, these poor collection figures seem disappointing.

Indeed, HMRC may be concerned that the initiative is not going to produce anywhere near the anticipated contribution to the Treasury.

HMRC may be concerned that individuals with significant illicit funds have already moved them to less transparent jurisdictions to escape the Swiss tax deduction.

Whether this is the case or not, we would question whether the Swiss initiative is now running out of steam. If so, are these recent letters a last ditch attempt on the part of HMRC to maximise the return as quickly as possible?

This was posted in Bdaily's Members' News section by Baker Tilly .