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HMRC closes in on £1bn Swiss disclosure deal

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29th Oct 2010
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The secret Swiss bank account of legend is to become a relic of the past if the UK government achieves its aims in negotiations with the Swiss government.

According to The Guardian, negotiations recently opened between the two countries as part of a wider EU information exchange initiative designed to reduce tax evasion via offshore bank accounts.

One of the proposals on the table is for the Swiss to levy tax on interest earned on accounts held by UK nationals, and to remit the funds to the UK.  A similar deal with the Italians reportedly raised more than €15bn.

The deal with the Swiss government is controversial, but is seen in Whitehall as a pragmatic way to raise extra revenue. As AccountingWEB.co.uk Tax Editor Rebecca Benneyworth put it, “X% of something is better than 0%, which is what we are getting at the moment.”

PKF tax investigation and dispute resolution partner John Cassidy said any Swiss deal would be a major accomplishment in the government’s campaign to bring tax havens “onside” and wondered whether an agreement would be accompanied by a temporary amnesty similar to the Lichtenstein Disclosure Facility (LDF).

“In the current climate, holders of Swiss accounts cannot assume their accounts will remain confidential for ever,” he said. “If anyone with an overseas account has tax arrears to declare, I would urge them to put things right before HMRC catches up with them.”

Less enamoured with the proposal is tax justice blogger Richard Murphy. Estimating that some £40bn or so of evaded assets will not now have to be declared, he accused Treasury secretary David Gauke of “giving away the whole lot” in potential penalties and interest via the amnesty.

“A person will under this new arrangement suffer an as yet not agreed rate of income tax deduction in Switzerland (35% is mooted, but I bet it won’t be that high) and then they will have no obligation to a) report this income in the UK and b) pay any additional higher rate tax in the UK,” Murphy continued.

“In other words if true then the UK has just done the following:

  • Granted Switzerland the right to set the effective higher rate of tax on investment income in the UK;
  • Granted Swiss banks an everlasting competitive advantage over UK banks – because it will pay all higher rate tax payers to bank in Switzerland henceforth
  • Denied the UK tax authority the right to make enquiries of their own choosing about the tax affairs of a British person – the Swiss now being granted the right to decide how many enquiries may be made and whether they are appropriate or not.
  • Granted criminal immunity to Swiss bakers who sell tax evasion – so allowing them to commit ongoing crime in the UK.”

Murphy accused Treasury ministers of putting “their devotion to the free flow of capital above their duty to the country” and added: “They believe they owe more to a tax haven than they do to the British people – on whom they willingly impose billions of cuts whilst granting tax evaders an outright amnesty.”

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By Michele Shapland
29th Oct 2010 12:53

The Swiss Disclosure Deal

I  agree with Richard comments. Why should they get away with paying less tax than the people who invest in this country. This is rediculous. Families with one earner whose income might be just above the higher rate threshold will loose their child benefits (my son  father of two weeks old twins is one of them affected by this measure) while these people will get away with not declaring their income this is not right...

 

Why not make the rate of tax applicable to all swiss bank account as 60%? they would then have the incentive to declare the income properly and pay the right amount in the end...

 

 

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By Trevor Scott
29th Oct 2010 15:40

“The secret Swiss bank account of legend is to become a relic of
Most of the media’s ideas on Swiss Bank accounts were wrong to start with, but the idea that a UK or other national can’t keep their affairs private in Switzerland (or elsewhere) is just crazy. If someone wants to, they can organize their affairs so that nobody else knows or can know about their affairs. It isn’t rocket science and it is surely that reality which has the Government accepting another small slice of the cake rather than have the cake move to another part of the World where they can’t get any cake at all.It will be interesting to see whether the EU commissioner for tax, who isn’t happy about this German/UK deal, will work to block the deal as he has already said that EU law overrides any such agreements; he is still pushing for automatic exchange of info.

 

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