3 Ways To Settle Your Tax
First Edition
Author: Clifford J. Frank
Price: $10.00


If you are a UK resident and hold assets in Switzerland, you will face tax liabilities under the UK-Switzerland Tax Co-operation Agreement (the Agreement). The three principal ways to settle your tax liabilities are:

  • an anonymous one-off payment to settle past tax liabilities

  • elect for withholding tax on income and capital gains going forward

  • a one-off withholding tax on death

What are the requirements for disclosure as an alternative to these deductions? What are Her Majesty’s Revenue & Customs (HMRC) powers and options under the Agreement? What options exist for UK residents with Swiss bank accounts?

The Agreement applies to individuals with beneficial interests in Swiss bank accounts, who are defined in the Agreement as “relevant persons who hold relevant assets with Swiss paying agents”. It should be noted that individuals who are already under investigation are excluded from past clearance, which is broadly defined. Clearance does not give immunity from criminal prosecution or naming and shaming. See HMRC side letter setting out their position (Appendix D).

An identified relevant person will be subject to three forms of tax deduction under the Agreement:

1. A one-off payment to settle past tax liabilities.

2. A lifetime withholding tax on income and gains going forward.

  • The lifetime withholding tax will not apply to interest income in respect of which either a disclosure is made or a retention is levied under the 2004 agreement between the EU and Switzerland on the taxation of savings income (EUSA).

  • Where a retention is made under the EUSA, a “tax decisiveness payment” will be levied in respect of that interest income, so that the overall outcome is equivalent to that achieved by the lifetime withholding tax.

3. A one-off withholding tax on relevant assets of 40% in the event of their death.

Where a relevant person or, in relation to the withholding tax on death, an authorised person chooses to allow these deductions, the relevant person’s anonymity can be preserved, allowing for clearance to be obtained in respect of past tax liabilities, ongoing tax liabilities in respect of the income and capital gains covered and liability to Inheritance Tax (IHT) in respect of relevant assets held at his date of death.

Alternatively, the relevant or authorized person, acting on behalf of the deceased estate, can avoid the deductions by authorising the Swiss paying agent to disclose information to HMRC. Non-UK domiciled individuals can additionally elect to opt out of the one-off payment or to apply it exclusively to income and gains that have a UK source or are remitted to UK.

They cannot opt out of the lifetime withholding tax, (levied only against their UK-source or remitted income and gains) the alternative of disclosure is limited to these. However, they must obtain confirmation of their domicile status from a professional adviser.

The withholding tax on death does not apply to individuals who are neither UK domiciled, nor deemed UK domiciled for IHT purposes at the time of their death. Confirmation of the deceased’s domicile status from a professional adviser is also required.  

Transfer of funds to HMRC in respect of one-off payments and lifetime withholding tax will not themselves be normally considered taxable remittances, as confirmed by the amendments to Schedule 36 of the Finance Bill 2013, effective from 1st January 2013.

The Agreement also contains measures to protect UK tax revenue, including:

  • Non-taxpayer specific information about the destination of funds moved out of Switzerland before the one-off payment is levied.

  • Requests for specific information about a UK taxpayer’s Swiss accounts where there is a tax risk.

  • Under the Agreement information will be exchanged automatically.

  • HMRC are not permitted to conduct fishing expeditions.

Table of Contents




Overview: 3 Ways to Settle Your Tax

Chapter 1 - Background to the Agreement

Chapter 2 - The One-off Payment

Chapter 3 - Clearance of Past Liabilities

Chapter 4 - Lifetime Withholding Tax

Chapter 5 - Withholding Tax on Death

Chapter 6 - Disclosure

Chapter 7 - Rules for non-UK Domiciled Individuals

Chapter 8 - Further Protection for HMRC Article 33

Chapter 9 - Practical Issues and Options

Chapter 10 - Options for UK Residents with Swiss Accounts

Appendix A (protocol amending the agreement)

Appendix B (the agreement)

Appendix C (hmrc faq)

Appendix D (side letter on criminal investigation)

Appendix E (agreed minutes)

Appendix F (schedule 36 fa 2012)

Appendix G (joint declaration)

Appendix H (comparative table with ldf agreement)

Definitions and Interpretation

Type of Product



Clifford J. Frank L.L.M


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