DORMANT ACCOUNT

A long term UK res-non dom individual inherited part of a £20,000,000 account from their non-resident grandfather in 2000. The UK resident was a minor beneficial owner directly entitled to 10% of the account. The money remained in a numbered Swiss account and the account details were never fully updated.  The family’s ancestral home was still used as the correspondence address.

The account receives 5% interest each year so the individual receives £100,000 (for illustrative purposes the interest is not compounded).

The individual is an additional rate/higher rate taxpayer in the UK but has no other income outside of the UK and has had no correspondence with regards to the account.

The individual failed to declare these monies from 2008/09 – 2016/17, total undeclared income of £900,000 and tax of £410,000 with interest of circa £70,000.

HMRC can impose a tax geared penalty of 200% – a further £820,000 and a further asset based penalty of 10% – £290,000.

The total payment due to HMRC would be £1,590,000 which would be over half the account balance.