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Friday
Apr292011

UK Close on Off-Shore Cash Deal

Chancellor of the Exchequer George Osborne is imminently set to sign a landmark agreement with the Swiss tax authorities that will see tax levies on "secret" Swiss bank accounts. The deal, once signed, seems set to bring in billions of  much needed pounds to Her Majesty's Treasury coffers. Officially, the government are not yet commenting on the deal but we can expect details to emerge in the next 6-8 weeks. The Swiss tax authorities are likely to announce details of the arrangement in the next 3-4 weeks.   

The claim is that this deal will raise billions of pounds while allowing the account holders to retain their anonymity and confidentiality. While the exact nature of the deal is unclear at this stage, key features are likely to include:

  • New rules for Swiss banks – Obliging UK customers to prove or demonstrate that they are fully compliant with the UK tax system
  • A deal with the Swiss to disclose financial information – as long as HMRC can show evidence of tax evasion
  • A withholding tax – rate as yet undetermined (25-35% is the possible figure)
  • Cash wired direct to the treasury anonymously - Allowing account holders in most cases to remain confidential and secret.
  • The deal is likely to allow HMRC to go back at least 5 years in respect of untaxed income/interest.

The amount of UK citizens that have Swiss bank accounts is unclear but the UK Treasury believe as much as £125 Billion could be lodged on Swiss soil. Treasury estimates suggest the deal could be worth anywhere between 3 and 6 billion pounds although it will be hard to place an exact figure on the tax yield. Liechtenstein has a similar deal with the UK tax authorities. The anticipated yield from that deal was £1billion but it appears that the yield may be treble that figure.

Head of tax policy at Deloitte - Bill Dodwell is quoted as saying: "This is a groundbreaking deal for HMRC- it will bring in billions. I expect some people will have a pop at it, as British clients of Swiss banks will still avoid the 50% rate of tax and keep their anonymity". He also said: "This will raise a lot of money and bring a lot of people back into the UK tax system". 

In a world that appears to be increasingly hostile towards tax havens, Off-shore tax planning and solutions are now more important than ever. Opening an account in Switzerland or Liechtenstein is no longer the choice it once was. There are still ways to legally minimise your tax burden. For all of your Off-Shore and wealth management needs visit St Matthew e-accountants. Or visit our website www.stmworldwide.com      

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