The clause amends legislation introduced in the previous Finance Bill to implement the UK-Swiss tax co-operation agreement, and will ensure that the policy objectives behind the agreement are delivered in full. Specifically, it removes an unintended effect, so that the levies paid by non-UK domiciled individuals to HMRC under the agreement will not be treated as taxable remittances where those individuals use their foreign income and gains to pay them.

The agreement was signed on 6 October 2011 by the UK and the Swiss Confederation, and is expected to yield more than £5 billion over the next six years. It came into force on 1 January 2013 and, as we have heard, a down payment of over £300 million has already been received from the Swiss banks. The agreement gives UK residents two choices: to suffer a withholding tax or to disclose their Swiss accounts to HMRC.

Schedule 36 to the Finance Act 2012 was introduced to bring into effect changes to UK law that would allow the agreement to be implemented. Under the existing rules, where an individual who is taxed on the remittance basis makes a payment under the agreement using their untaxed foreign income and gains, that payment will itself be treated as a taxable remittance. That was never the intention. The clause will amend the rules as they apply to remittance basis taxpayers who are subject to the agreement. It will ensure that, where levies are made under the terms of the agreement, those levies are not themselves treated as remittances for UK tax purposes. The changes made by the clause are estimated to have a negligible Exchequer cost.