An incoming landmark tax treaty between the UK and Switzerland means that the UK tax authorities will be able to “effectively reach people beyond the grave”, the accountancy firm Saffery Champness has warned.

Under the agreement a new penalty is to be levied on accounts which are inherited from the original holders of Swiss accounts who have died and this may entail harsh, unforeseen consequences for the deceased’s inheritors, according to Ronnie Ludwig, a partner in the firm’s private wealth team.

“In many such cases, people may have chosen not to declare interest from offshore accounts because it was not just the interest earned in the hidden accounts that should have been taxed, but the capital sum deposited as well,” Ludwig.

“These capital sums, however, could have been derived from undeclared business dealings, possibly over the internet. However, it is clear now that the authorities will catch up with the evader on death, if not sooner.”

As a result, Ludwig cautions, recalcitrant Swiss account holders who have not declared the capital sum held in the account – as well as the interest accrued on it – to the authorities could end up leaving their heirs with a hefty tax bill.

“The world is becoming an ever-smaller place for tax evaders and anyone who may still have undeclared funds offshore would be well advised to prepare a full disclosure report to HMRC,” said Ludwig.

The new tax agreement between the UK and Switzerland will preserve the Alpine’s state’s historic banking secrecy but will impose a withholding tax on all future income from funds held by UK nationals in Switzerland. The UK authorities expect the agreement to bring in a much needed additional £1 billion ($1.6 billion) in tax revenues, however Ludwig is sceptical as to the actual amount that will be raised.

“It will be interesting to see whether the actual tax hike from the deal will meet the government’s predictions, as the yield on recent offshore tax amnesties proved to be only a fraction of initial HMRC estimates,” he said.