The Chartered Institute of Taxation has warned that UK residents who have already informed HM Revenue and Customs of their Swiss bank accounts could be taxed twice if they do not make a further disclosure under the Government’s new tax deal.
Last month, HMRC announced a deal with the Swiss government that will see UK residents hit with a one-off tax charge of between 19 and 34 per cent of their account balance in 2013 to settle ongoing liabilities.
They also face a new annual withholding tax of 48 per cent tax on investment income, 40 per cent on dividends and 27 per cent on gains from 2013.
The deal is not designed to affect those who have already paid their taxes.
But CIOT management of tax sub-committee chairman Gary Ashford says: “Innocent taxpayers who have always properly reported their Swiss income are at risk here. They will need to make a further disclosure to avoid the deduction from their account balance in 2013.”
Ashford says there is a risk that the deal will encourage tax evaders to move their money to less accessible jurisdictions to avoid paying tax.
He says: “The rate of withholding tax being charged is high. There is a risk that accountholders will move their money to even more distant and inaccessible locations, which is in neither governments’ interests.”
Churchill Investments director Chris Gilchrist says: “IFAs should be telling their clients to make the additional disclosure in order to avoid the one-off charge.”