UK signs agreement to tax Swiss bank accounts

UK signs agreement to tax Swiss bank accounts

The Treasury will recoup more than £5bn in unpaid tax from Britons with Swiss bank accounts under a deal between the UK and Switzerland signed last night. Switzerland’s strict secrecy laws have made it a safe haven for the rich, but the UK Government is cracking down on offshore tax evasion.

In 2013, the Swiss banks will hand over a one-off levy of more than £5bn to settle past tax liabilities of Britons with money salted away in the country.

From then on, Switzerland will impose a withholding tax of 48 per cent on income such as interest and 27 per cent on capital gains such as shares rising in value. It is unclear how much this will raise because some Britons may move their assets elsewhere.

The agreement was signed in Zurich by Dave Hartnett, the permanent secretary for tax at HM Revenue & Customs. “The world has changed for tax evaders,” he said. “A few years ago, nobody would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion.” Legislation to enforce the agreement will be included in the measures to implement next spring’s Budget.

George Osborne, the Chancellor, said last night: “We will be as tough on the richest who evade tax as those who cheat on benefits. The days when it was easy to stash the profits of tax evasion in Switzerland are over.” He allocated HMRC an extra £900m to tackle evasion during his government-wide spending review. It is expected to bring in an extra £7bn a year of revenue by reducing evasion at home and abroad by 2015. Estimates suggest that evasion and avoidance costs the Exchequer about £14bn annually.

Treasury officials sought a retrospective element, a move which initially met resistance in Zurich but has now been resolved by the £5bn-plus windfall. It is based on a tax level of 19 to 34 per cent on estimated past tax liabilities. The deal will include a new information sharing agreement to make it easier for HMRC to find out about Swiss accounts held by UK taxpayers.

Last year, the G20 group of leading economies ordered a global clampdown on offshore tax havens. Successive British governments have promised to close loopholes but the international pressure has now strengthened the Treasury’s hand.

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