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Tax Schemes and Swiss Bank Accounts
Newsletter issue - February 2013.
Have you received a letter from the Taxman recently, inviting you to pay tax avoided by using a tax scheme or Swiss bank account?
The specific tax avoidance schemes involve one or more of the following:
- the manipulation of accounting rules;
- British film tax relief;
- artificial trading losses.
The Taxman believes these tax schemes don't work, but rather than go to the trouble and expense of proving this in the Courts, he is asking taxpayers to pay the tax they have avoided by using the scheme. This settlement offer does not include any attractive penalty terms or reduction in interest due. The only benefit to you is a quick resolution of your tax affairs without a drawn-out investigation which could potentially lead to a criminal prosecution. Only taxpayers who receive a specific invitation from the Taxman can take up this settlement opportunity.
The UK/Swiss tax agreement applies to bank accounts held in Switzerland by individual UK resident taxpayers which were open on 31 December 2010 and remain open on 31 May 2013. If the bank account holder does not instruct the bank to disclose details of the account to the UK tax authorities, the funds in that account will be subject to a one-off tax deduction that covers income tax, capital gains tax, inheritance tax and VAT liabilities, calculated on a formula based on the length of time the account was held and the rate the balance in the account increased over that period.
The taxman is writing to taxpayers who are known to hold Swiss bank accounts, to warn them that tax deductions will apply unless the relevant disclosures are made, and penalties of up to 150% of the tax due could be imposed. Note that if you opt for the one-off tax deduction, as opposed to full disclosure, you will not be protected from possible criminal prosecution.
If you have received either of these warning letters from the Taxman, please contact us immediately for advice.
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