The UK / Swiss tax agreement will come into force on 1 January 2013 and any UK residents who hold assets in an account in Switzerland will need to take notice, even if they are currently fully tax compliant.

In relation to past tax liabilities, UK resident individuals may either opt to voluntarily disclose the existence of their asset(s) to HMRC or, if they prefer to retain their anonymity, the bank will deduct a one-off payment to be directed to HMRC. The rate payable will be between 21% and 41% of the value of the assets.

Whichever route is adopted to settle past tax liabilities, UK resident individuals must either continue to authorise disclosure to HMRC every year or again remain anonymous but become subject to an annual withholding tax charged at 27% for capital gains, 40% for dividend income and 48% for interest. A further one-off 40% withholding tax charge on death has also been introduced. Submitting to the charges in return for anonymity will not provide immunity from possible criminal prosecution.

Individuals who are UK resident but non-UK domiciled and claim the remittance basis can opt out of the rules. In order to do so, they must supply a certificate from a relevant professional (i.e. a lawyer, accountant etc) attesting that they are UK tax compliant, not domiciled in the UK and confirming that they have claimed the remittance basis for both the 2010/2011 and the 2011/2012 tax year (in relation to past liabilities) or the relevant tax year going forward. Levies received by HMRC from remittance basis users will not be treated as taxable remittances themselves.

If you have Swiss assets and have not already done so, please contact your usual advisor as soon as possible to ensure compliance with the new regime.

This article first appeared in the Boodle Hatfield Private Client & Tax News December 2012.