Agreement with Switzerland to secure billions in unpaid tax
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24 August 2011 - Treasury
The Government is today initialling an historic agreement
with Switzerland to tackle offshore tax evasion. The agreement will
resolve the long-standing abuse of Swiss banking secrecy by those who
seek to conceal the proceeds of tax evasion and is expected to secure
billions of pounds of unpaid tax for the UK exchequer from 2013.
Under the terms of the agreement, existing funds held by UK
taxpayers in Switzerland will be subject to a significant one-off
deduction of between 19% and 34% to settle past tax liabilities,
leaving those who have already paid their taxes unaffected.
As a gesture of good faith Swiss banks will make an up-front payment
from Switzerland to Britain of CHF 500m.
From 2013, a new withholding tax of 48% on investment income
and 27% on gains will ensure the effective future taxation of UK
residents with funds in Swiss bank accounts. This will be accompanied
by a new information sharing provision which will make it easier for HM
Revenue and Customs to find out about Swiss accounts held by UK
taxpayers. The new charges will not apply if the taxpayer
authorises a full disclosure of their affairs to HMRC.
The agreement with Switzerland is the latest step in HMRC’s
crackdown on offshore tax evasion, which includes the agreement of the
Liechtenstein Disclosure Facility, the creation of a new dedicated team
of investigators to catch those hiding money offshore and ongoing work
to put in place information sharing arrangements with other countries.
George Osborne, Chancellor of the Exchequer, said:
"Tax evasion is wrong at the best of times, but in economic
circumstances like this it means that hard-pressed law-abiding
taxpayers are forced to pay even more. That is why this Coalition
Government made it a priority to go after those who don't pay their
fair share. We will be as tough on the richest who evade tax as on
those who cheat on benefits. The days when it was easy to stash the
profits of tax evasion in Switzerland are over.”
David Gauke, Exchequer Secretary to the Treasury, said:
“I am delighted that, through our constructive discussions
with the Swiss Government, we have secured the best possible deal for
UK taxpayers. This historic agreement will enable us to
collect billions of pounds from those who have for too long evaded
their responsibility to pay UK tax by abusing Swiss banking secrecy.
The message is clear: there is no hiding place for tax cheats.”
Dave Hartnett, Permanent Secretary for Tax at HMRC, said:
“The world has changed for tax evaders. A few years ago,
nobody would have anticipated that we would conclude an agreement with
Switzerland to tackle tax evasion. However, with the clear
wish of Switzerland as well as the United Kingdom to ensure that tax is
paid as it should be, we are embarking on a new course which preserves
important principles for each jurisdiction, and will be fair for all UK
taxpayers. Our strategy is working. We will secure
significant sums of tax that some had thought we would never
see. Not only does this agreement settle past liabilities and
make arrangements to secure correct taxation in the future, it also
gives HMRC more scope to find out about Swiss accounts.”
The agreement is expected to come into force in 2013,
following scrutiny by Parliament and after ratification procedures in
Switzerland are complete.
1. The agreement will be initialed (i.e. ratified in
principle) today in Zurich by Dave Hartnett, Permanent Secretary for
Tax at HMRC and Michael Ambuehl, Swiss State Secretary. It is expected
to be formally signed in the coming months. It will then go
through Parliamentary and administrative procedures before being signed
later in the year. The full text will be published at the time of
2. UK and Swiss ministers issued a joint declaration
on 25 October 2010 agreeing to start negotiations on co-operation in
tax matters. This agreement is the result of those negotiations.
3. Accounts held by individual UK taxpayers in
Switzerland will be subject to a one-off deduction in 2013, as long as
the account was open on 31 December 2010 and is open on 31 May 2013.
This deduction will settle income tax, capital gains tax, inheritance
tax and VAT liabilities in relation to the funds in the account. The
deduction will not be applied if the account holder instructs the bank
to disclose details of the account to HMRC. Following that disclosure,
HMRC will seek unpaid taxes with relevant interest and penalties.
4. From 2013, income and gains arising on
investments held by individual UK taxpayers in Swiss banks will be
subject to a new withholding tax. The rates of this withholding tax
will be very close to the top rates of UK tax. Payment of the
withholding tax will satisfy UK tax liabilities on the income and
gains. Again, the withholding tax will not apply if the account holder
authorises disclosure of details of income and gains to HMRC and pays
any associated taxes here.
5. A powerful new provision will allow HMRC to
discover whether an individual UK taxpayer has an account in
Switzerland. This power is in addition to, and goes further than, the
provisions for information exchange under the UK-Switzerland Double
6. UK taxpayers with Swiss accounts will be
contacted by their Swiss financial institution in due course.
7. The Lichtenstein Disclosure Facility (LDF) is
unaffected by this proposed agreement.
8. The UK has led international efforts to tackle
offshore tax evasion, playing a prominent role in the Global Forum on
Tax Transparency and Exchange of Information and signing 20 new
information sharing agreements since the start of 2010.
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Article Published/Sorted/Amended on Scopulus 2011-08-25 22:39:30 in Tax Articles