Last year individuals with accounts in Switzerland and UK addresses were contacted by their banks and given two choices: disclose their details to HMRC or make a one-off payment of between 21% and 41 % of the value in their account. There have been a number of instances where account holders have alleged that a one-off payment was levied incorrectly. HMRC's position is that account holders should seek redress from their bank in the first instance. Only if this fails should account holders apply to HMRC for a refund. However, HMRC do not yet have a system in place for considering claims and in the meantime they are asking account holders for details. Account holders should consider obtaining advice before contacting HMRC.
Swiss Tax Agreement
The Agreement between the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland came into force on 1 January 2013.
The Agreement is relevant to individuals with UK addresses who hold a Swiss bank account (and certain other investments in Switzerland). The 'Swiss paying agents' (in most cases a bank) were required to write to account holders with details of the Agreement and giving them the following options:
- To make a voluntary disclosure – the paying agent will write to HMRC with details of the account holder's identity and the assets held in the account.
- To suffer a one-off payment – the paying agent will deduct a one-off payment of between 21% and 41% of the assets held in the account in question. This one-off payment serves as final settlement of any UK tax liability on the assets held in the account. Following the one-off payment account holders are provided with a certificate of charge.
Alternatively, account holders could provide the paying agent with a certificate signed by a UK lawyer or accountant confirming that they are not domiciled in the UK and that they have elected the remittance basis of taxation. On being provided with such a certificate the paying agent would not make a disclosure or levy the one-off payment.
Incorrectly Levied One-off Payments
Since the choice became irrevocable on 31 May 2013 a number of incorrectly levied one-off payments have been reported to HMRC.
The Swiss Tax Agreement states that HMRC, as the 'competent authority', must refund the one-off payment. However, HMRC's position is that account holders should seek recovery from the paying agent in the first instance. It is only where individuals have been unable to reach a solution through the paying agent that HMRC will consider claims for a refund of the one-off charge. Unfortunately, the process and criteria for considering these claims are not yet known and it may be some time before they are finalised.
HMRC is contacting those who have indicated that they wish to make a claim in order to gather enough information to consider the claim once a process is in place. Information which HMRC is requesting includes the personal details of the account holder, evidence of the one-off payment, confirmation from the bank that it will not refund the charge and the disclosure of any historical unpaid UK tax that would become due should the one-off payment be reversed.
Account holders should consider obtaining legal advice before providing these details to HMRC.
If you would like any further information on this subject or any other tax related matter, please contact Suzanna Harvey.