Following the signing of the UK-Swiss tax agreement in October this year, Swiss banks are currently writing letters to all account holders who have a connection with the UK.  Letters are also being sent to those considered to be “relevant persons” in respect of trusts and foundations that hold Swiss accounts (settlors and beneficiaries would be regarded as “relevant persons”).

The letters provide the account holders with two options:
1. To authorise the Swiss bank to provide details of assets held by the account holder to HMRC, plus future income and gains received; or
2. To retain their anonymity but accept a one-off charge plus withholding taxes on future income and gains.

Option 2 does NOT mean that this regularises the taxpayer’s tax affairs for prior years.

For those persons who are resident in the UK but not domiciled and claiming the remittance basis, a letter will need to be provided to the bank confirming their status. The letter needs to be signed by an appropriately qualified tax adviser. This will be an annual requirement as the remittance basis claim is an annual election.

Even if the account holder has declared and paid all tax on overseas income and gains and complied fully with their UK tax obligations, the letters must be addressed and full information must be provided in response to the letter before the deadline set by the bank.

The onus will be on the individual to contact the bank, if they have not been contacted by the bank (eg, due to change of address).  Whilst some banks will attempt to follow up on the reason for no response, others will apply a default system whereby a failure to respond will result in the one-off charge and ongoing withholding taxes.

For individuals who have historically complied with their UK tax obligations and continue to do so, the procedure for response should be relatively straightforward.  If, however, this is not the case then other options need to be considered in a relatively short timeframe.

One option would be to consider making a disclosure under the Lichtenstein Disclosure Facility (LDF), which offers generous terms particularly with penalties for non-compliance.

For further information regarding the Swiss Agreement and options available under the Lichtenstein Disclosure Facility please refer to our LDF and UK Swiss Tax Agreement Summary.

For help and advice relating to the letters received by the Swiss banks and advice on the options available should you require the regularisation of your historical UK taxes, please contact either Jason Gyamerah (Zurich) or Sara Shahran (London).