HMRC have received information about Swiss assets and investments held by UK persons under the UK/Swiss Tax Cooporation agreement, and are now writing to those individuals. HMRC are asking individuals who have any UK liabilities to declare to make a disclosure of these to regularise their tax affairs. If the individual’s tax affairs are correct, HMRC are asking that the individual confirm this by completing two documents: a certificate and a declaration. Both documents are wide ranging, as they relate to worldwide assets and income, including interests in overseas entities, not just Swiss accounts. A timescale has not been applied to the period to which they relate, thus it appears to cover all years HMRC could assess. There is no statutory obligation to complete either, but if no response is made by the specified time, HMRC have said they may commence a detailed investigation into the individuals’ affairs.
Most individuals who receive such letters will have paid the right amount of tax. For example, there may be no liabilities in relation to Swiss income or gains for non-domiciled clients on the remittance basis where no income and gains have been remitted to the UK. However, before deciding how to respond to HMRC, all individuals should first check and understand their tax position.
As a minimum they may wish to find out what information HMRC have concerning Swiss income and gains - for example, by checking the documentation which they hold for their bank accounts or investments, or by contacting the Swiss banks for information if necessary. In addition, they may wish to consider some wider checks, as it is highly likely this is exactly what HMRC intend to do – for example, have all remittances to the UK been identified and declared, does the overseas investment portfolio include any UK source income, etc.? If there is any uncertainty, taxpayers may wish to undertake some precautionary reassurance checks.
Depending on the outcome of such checks, the appropriate response to HMRC should be carefully considered. Whether this be a disclosure of additional liabilities, a letter confirming that there are no liabilities, or the completion of the requested certificate and declaration, please get in touch with your usual KPMG tax contact to discuss the appropriate response.
In all cases such letters should be considered carefully and responded to. Even if a return is correct, dealing with in-depth enquiries from HMRC will be more time consuming and expensive than undertaking pre-emptive checks. If tax has been underpaid, failure to make the appropriate response to such letters and to correct the position will lead to significantly increased penalties, and in certain cases could trigger a criminal investigation by HMRC.
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