Hidden assets offshore? – Act now to save money
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Ken Mawdsley, Director of Tax Investigations and Dispute Resolution, RSM Tenon
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THE UK Tax Agreement with Switzerland came into force on 1st January 2013 so perhaps not such a happy new year ahead for those with assets in Switzerland who wished them to remain hidden from the clutches of HMRC. The Agreement does actually allow for anonymity but at a significant cost to the assets held. It is expected that the UK treasury will receive billions of pounds from Switzerland at the end of May this year. There is not much time to act on this as over recent months the Swiss banks and other paying agents have been issuing letters to those that they have identified as ‘relevant persons’ under the Agreement. A relevant person is defined as any individual resident in the UK who has a contractual relationship with a Swiss paying agent/bank and is an account holder, deposit holder or beneficial owner of assets with that agent/bank. It also extends to any person who has been identified by the Swiss paying agent/bank as the beneficial owner of assets held by a domiciliary company, foundation, trust or insurance wrapper, or an account held with a Swiss paying agent/bank by another individual. We saw a rush of people before Christmas looking to decide how to proceed i.e. become tax transparent or keep their anonymity and pay a one off payment of up to 41% of their bank account balance and a withholding levy moving forward of 27%-48% per annum on future income or gains. Many actually opted for transparency and to make a disclosure to HMRC under the separate agreement with Liechtenstein, the Liechtenstein Disclosure Facility. In many cases the LDF meant them paying less to HMRC, even after paying tax, interest and penalties than they would have under the UK/Swiss agreement due to the fact that the LDF taxes income back to 1999 whereas the Swiss agreement taxes the capital balance using a complicated formula based on balances at several dates. The other advantage of the LDF approach is that the person does not then have the withholding tax problem, although of course where appropriate they will need to disclose the income going forward. There is still some uncertainty as to what actually is cleared under the Swiss agreement and clients generally like assurance. The LDF often provides that whereas the Swiss agreement may not. The other opportunity offered by the LDF is that it applies to otherwise undisclosed offshore income and assets anywhere in the world, it is not linked to the Swiss Agreement in that regard. The message for those with undisclosed Swiss based assets who want to make their peace with HMRC is act very swiftly to avoid losing a significant slice of what you have. For those of the same persuasion but with no connections to Switzerland the message is that the LDF may well be the cheapest and most controlled way of regularising your UK tax affairs and making your position more transparent for you and your inheritors, don’t leave them with pile of costs. RSM Tenon has a specialist team that manages disclosures under the LDF and can offer assistance and advice in all areas of tax investigation and dispute resolution. Please contact Ken Mawdsley, Director of Tax Investigations and Dispute Resolution on +44 (0)7800 617 389 or ken.mawdsley@rsmtenon.com More articles in
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