European Commission lawyers have concluded that the UK’s controversial tax agreement with Switzerland is in breach of EU law, the Financial Times has reported, and Brussels is ‘threatening to sue’ the UK unless the deal is significantly altered.
European Commission lawyers have concluded that the UK’s controversial tax agreement with Switzerland is in breach of EU law, the Financial Times has reported, and Brussels is ‘threatening to sue’ the UK unless the deal is significantly altered.
‘The warning has prompted Germany ... to initiate a new round of talks with Switzerland. British officials initially reacted badly to the Commission ultimatum but are now assessing their options,’ Alex Barker reported for the FT.
'The Treasury should seize the opportunity to take Bern back to the negotiating table. Austerity at home must be matched by firmness against tax evaders at large. Voters demand nothing less.'
Financial Times editorial
Critics have complained that the UK-Swiss agreement, due to come into force in 2013, would preserve anonymity for thousands of British tax evaders.
The Tax Justice Network, which has demanded the immediate cancellation of the agreement, said the latest development was ‘excellent news’.
‘We have already demonstrated how the UK cannot hope to get even a fraction of the money from the deal that has been trumpeted by HMRC. And we don't tire of saying that nobody, anywhere, has found a specific fault with our analysis – even though the tax advisers who are currently drooling over the possibilities that emerge from all those loopholes have sought to play our report down,’ the TJN said.
An FT editorial today noted that the threat of legal action ‘offers an opportunity to reopen the deal’. Suggesting that the UK approach abdicated the ‘fight against secrecy’, the paper said the UK Treasury should ‘seize the opportunity to take Bern back to the negotiating table’.
Austerity at home ‘must be matched by firmness against tax evaders at large’, it added.
Swissinfo.ch reported that while the ‘Swiss designed Rubik tax treaty system’ promised to ‘weed out undeclared assets and hand over tax to other countries instead of the names of tax dodgers’, the system ‘strikes a blow at the heart of the EU’s strategy to force Switzerland into an automatic exchange of information to assist tax evasion investigations’.
'We don't think banking secrecy will disappear in Switzerland at any time in the foreseeable future, certainly not in the next 10 years'
Dave Hartnett
It noted that in a recent interview with the Chartered Institute of Taxation, Dave Hartnett said he did not think the Swiss deal would let fraudsters off.
Hartnett, HMRC’s Permanent Secretary for Tax, told the CIOT in September: ‘I don't think it does let fraudsters off, because we weren't going to catch them anyway, particularly tax fraudsters. We don't know who they are. We don't know what they've done.
‘We don't think banking secrecy will disappear in Switzerland at any time in the foreseeable future, certainly not in the next 10 years. So what we are doing is collecting back taxes from people who we couldn't identify.
‘And at a time when our nation has a deficit it seemed like a very sensible thing to be doing. But not everyone who has committed some sort of money crime will be able to benefit from withholding. Those who have been in organised crime, organised tax crime like carousel fraud, may well have money taken from them, but it will be regarded as a payment on account rather than creating finality.’
European Commission lawyers have concluded that the UK’s controversial tax agreement with Switzerland is in breach of EU law, the Financial Times has reported, and Brussels is ‘threatening to sue’ the UK unless the deal is significantly altered.
European Commission lawyers have concluded that the UK’s controversial tax agreement with Switzerland is in breach of EU law, the Financial Times has reported, and Brussels is ‘threatening to sue’ the UK unless the deal is significantly altered.
‘The warning has prompted Germany ... to initiate a new round of talks with Switzerland. British officials initially reacted badly to the Commission ultimatum but are now assessing their options,’ Alex Barker reported for the FT.
'The Treasury should seize the opportunity to take Bern back to the negotiating table. Austerity at home must be matched by firmness against tax evaders at large. Voters demand nothing less.'
Financial Times editorial
Critics have complained that the UK-Swiss agreement, due to come into force in 2013, would preserve anonymity for thousands of British tax evaders.
The Tax Justice Network, which has demanded the immediate cancellation of the agreement, said the latest development was ‘excellent news’.
‘We have already demonstrated how the UK cannot hope to get even a fraction of the money from the deal that has been trumpeted by HMRC. And we don't tire of saying that nobody, anywhere, has found a specific fault with our analysis – even though the tax advisers who are currently drooling over the possibilities that emerge from all those loopholes have sought to play our report down,’ the TJN said.
An FT editorial today noted that the threat of legal action ‘offers an opportunity to reopen the deal’. Suggesting that the UK approach abdicated the ‘fight against secrecy’, the paper said the UK Treasury should ‘seize the opportunity to take Bern back to the negotiating table’.
Austerity at home ‘must be matched by firmness against tax evaders at large’, it added.
Swissinfo.ch reported that while the ‘Swiss designed Rubik tax treaty system’ promised to ‘weed out undeclared assets and hand over tax to other countries instead of the names of tax dodgers’, the system ‘strikes a blow at the heart of the EU’s strategy to force Switzerland into an automatic exchange of information to assist tax evasion investigations’.
'We don't think banking secrecy will disappear in Switzerland at any time in the foreseeable future, certainly not in the next 10 years'
Dave Hartnett
It noted that in a recent interview with the Chartered Institute of Taxation, Dave Hartnett said he did not think the Swiss deal would let fraudsters off.
Hartnett, HMRC’s Permanent Secretary for Tax, told the CIOT in September: ‘I don't think it does let fraudsters off, because we weren't going to catch them anyway, particularly tax fraudsters. We don't know who they are. We don't know what they've done.
‘We don't think banking secrecy will disappear in Switzerland at any time in the foreseeable future, certainly not in the next 10 years. So what we are doing is collecting back taxes from people who we couldn't identify.
‘And at a time when our nation has a deficit it seemed like a very sensible thing to be doing. But not everyone who has committed some sort of money crime will be able to benefit from withholding. Those who have been in organised crime, organised tax crime like carousel fraud, may well have money taken from them, but it will be regarded as a payment on account rather than creating finality.’
