Tax evasion ‘net is tightening’ after Swiss deal
7 October 2011 Last updated at 14:43
The “net is tightening” on tax evaders from the UK following a deal struck with the Swiss authorities, an industry body has said.
More details have been released about the agreement in which undeclared money held by UK taxpayers in Swiss accounts will be taxed for the first time.
Concerns were raised that it offered an amnesty to some tax dodgers.
But the Chartered Institute of Taxation (CIOT) said lawbreakers could still be prosecuted.
“This is a significant agreement which opens a new chapter in tackling international tax evasion,” said Gary Ashford, of the CIOT.
“Rightly, the net is tightening on those who think they can keep money in offshore bank accounts out of sight of the taxman.”
Under the terms of the agreement, the Swiss will tax the bank accounts of the UK taxpayers from 2013 and transfer the money directly to the Treasury.
The accounts in Swiss banks will be taxed at between 19% and 34% by the Swiss authorities on the principal sum, depending on how long the account has been running.
The Swiss have agreed to make an initial downpayment of 500m Swiss francs (£385m).
From 2013, the account holders will also face an annual levy of between 27% and 48% on the income from their accounts, depending on whether it has arisen as capital gains, dividends or interest.
The deal, part of the UK tax authority’s efforts to track down and tax money hidden in offshore bank accounts, could initially see up to £5bn being handed to HM Revenue and Customs by the Swiss authorities.
The UK authorities will also have the right to request the banking details of 500 UK individuals a year for further investigation.
For decades, Swiss banking laws have provided complete secrecy for foreigners operating bank accounts there. The account holders have been able to use the accounts to hide money from the own tax authorities, without even having to pay any Swiss tax.
The text of the deal has now been published and accountants have said it offers opportunities to tackle evasion, especially if people try to move their money.
“It is a move in the right direction for the agreement and will help clamp down on evasion,” said Heather Taylor, tax investigations director at Grant Thornton.
“The announcement said Switzerland will collect data on the destination of funds withdrawn from the country and they will share the top 10 destinations with the UK. However individuals will not be identified.
“HM Revenue and Customs has specifically stated that it will not suspend or scale down enquiries on potential offshore Swiss accounts between now and when the treaty comes into force in January 2013.”
Mr Ashford, of the CIOT, said: “The text of the deal leaves them with plenty of routes to pursue Swiss account holders guilty of serious crimes if they choose to do so.
“This applies even to those who pay the one-off tax on their Swiss account balances or who disclose their account information voluntarily.”
Chas Roy-Chowdhury, head of taxation at the ACCA, said that more names could be provided to the UK tax authorities than just the 500 originally agreed.
He said people should come clean or face a stiff penalty.
But charity Christian Aid described the deal with the Swiss authorities as “collusion with criminality”.
“This deal makes it much less likely that developing countries will ever be able to get the taxes owed to them from those hiding money in tax havens like Switzerland. It is a disgrace,” said Christian Aid director Loretta Minghella.