Swiss bank accounts and portfolios – time is running out!

3 May 2013

Under the terms of the UK-Swiss Tax Agreement, the Swiss banks have a deadline of 31 May 2013 by which UK-resident account holders need to:

  1. Authorise voluntary disclosure of account details to the Swiss authorities (and from them to HMRC); or
  2. Provide their bank with confirmation from a lawyer, accountant or tax adviser that they are not domiciled in the UK and are claiming the remittance basis of taxation; or
  3. Accept that (as a price for maintaining anonymity) a one-off charge calculated at between 21% and 41% of the balance at 31 December 2010 will be deducted from their account.

If no action is taken by 31 May 2013, the one-off charge will be applied automatically as the default option.

Voluntary disclosure has obvious implications for anyone who hasn’t already made HMRC aware of all liabilities relating to the account in question. Given the significant penalties that may be levied in other circumstances, individuals who choose this option should at the same time be looking to make a direct disclosure to HMRC so that the liabilities can be dealt with on favourable terms. A transfer of a proportion of the funds to Liechtenstein to bring the account within the scope of the Liechtenstein Disclosure Facility (LDF) will in many cases be the best option.

Non-domiciliaries claiming the remittance basis have two choices. They can opt to have the one-off charge calculated by reference to amounts remitted to the UK since 1 January 2003 or – if they are sure that no historic UK liability exists – they can opt out of the charge altogether.

Anyone who holds a Swiss account should have been contacted by their bank and provided with a computation of the one-off charge. There will be cases, however, where contact has been lost (typically because the account holder has moved house several times or died) and others where the account holder gave instructions that no contact should be made. In such cases the default option will be applied unless the account holder (or his/her heirs) comes forward now.

It has to be recognised also that, while the larger Swiss banks have dealt well with the implementation of the agreement and the paperwork that this has involved, some of the smaller banks have found it harder to deal with the drafting of appropriate letters and the identification of UK-resident clients (some have even decided that account closure will be their default option). The customers of those banks may be in particular need of help.

If you or a family member holds a Swiss account and has yet to take any action (whether because you have not been contacted or because you are struggling to make a decision) you need to act now! While the Swiss banks can point you towards certain options, high quality UK tax advice is essential.

We have advised a long stream of clients about their options under the UK-Swiss Agreement and dealt with a succession of LDF and other disclosures. If you need help, talk to us now (all initial discussions are free of charge and, if you prefer, can be on an anonymous basis).