The move by the UK tax authority to contact more than 6,000 account holders at HSBC Geneva proves that individuals should act urgently, in some cases using the Liechtenstein Disclosure Facility to clean up their affairs, a law firm says.

As reported last week, HM Revenue & Customs announced that it was contacting account holders and said it had already launched criminal or serious fraud investigations into more than 500 persons and organisations holding accounts at the Geneva bank, part of the UK/Hong Kong-listed group.HSBC declined to comment on the matter when contacted by this publication.

HMRC’s action follows the signing earlier this month of a treaty between the UK and Swiss governments. The treaty, which comes into force in 2013, will see UK taxpayers with secret Swiss accounts paying a charge of between 19 per cent and 34 per cent on their assets to settle past liabilities.

The move is part of a broad assault by governments in the UK, US, Germany and elsewhere against offshore financial centres as they seek to recover “lost” revenues.

“Some tax evaders may have seen the UK Swiss tax deal as setting a deadline for sorting out their tax affairs,” said Phil Berwick, director at McGrigors, the UK law firm.

"Rather than starting serious fraud investigations, taxpayers are being given an opportunity to come forward.  For many, the best route will be the Liechtenstein Disclosure Facility, which offers immunity from prosecution for tax offences, and favourable settlement terms".

The LDF, set up in 2009 by the UK government with the tiny Alpine principality of Liechtenstein, offers UK taxpayers the chance to disclose previously secret accounts in return for a relatively limited penalty. People who disclose assets pay a fixed penalty of 10 per cent on unpaid taxes, a tax liability stretching back only 10 years, and are given immunity from prosecution. One of the architects of the LDF, Philip Marcovici, urged taxpayers earlier this year not to wait for any UK treaties to be signed. (Marcovici recently stood down as CEO of LawInContext, a firm he had created with international law firm Baker & McKenzie. He is a member of this publication’s editorial advisory board.)

McGrigors’ Berwick said HMRC was intensifying the pressure, and that waiting is not an option.  

The LDF was useful to account holders as there is immunity from prosecution for tax offences but no such protection under the Swiss tax agreement; the Swiss tax treaty only covers funds held in Swiss bank accounts, but the LDF covers all an individual’s worldwide assets. He added that HMRC may seek to prosecute those taxpayers using the Swiss tax treaty who failed to make a full disclosure under a previous disclosure process (whereas those people can use the LDF without fear of prosecution).