Swiss deal is a highly effective solution to tax evasion, says Gauke

The UK and Switzerland yesterday signed their controversial agreement on cooperation to tackle tax evasion by UK residents, two days after the Tax Justice Network ranked Switzerland top of its ‘Financial Secrecy Index’. 

The Chartered Institute of Taxation, noting the widespread criticism the deal has attracted in recent weeks, said the agreeement ‘leaves [HMRC] with plenty of routes to pursue Swiss account holders guilty of serious crimes if they choose to do so’.

David Gauke, the Exchequer Secretary to the Treasury, and Swiss Finance Minister Eveline Widmer-Schlumpf signed the agreement in London.

Gauke said: ‘This is an excellent agreement which tackles a problem many people thought would never be solved. Working with the Swiss government we have delivered a highly effective solution which will benefit both countries and recover billions of pounds of unpaid tax for the UK.’

HMRC said the agreement ‘ensures funds of UK taxpayers in Switzerland face a significant one-off deduction of between 19% and 34% to settle past tax liabilities’.

‘From 2013, a new withholding tax of 48% on investment income and 27% on gains applying to those who have not previously told us about these assets will ensure the effective future taxation of UK residents with funds in Swiss bank accounts. The new charges will not apply if the taxpayer authorises a full disclosure of their affairs to HMRC.’

HMRC said the agreement, available on the department’s website, included:

• a ‘powerful anti-abuse clause’ to prevent the promotion of avoidance by Swiss banks; and
• a programme of audits, overseen by a new UK-Swiss joint commission, to ensure that banks are complying with their obligations.

‘ Switzerland will collect data on the destination of funds withdrawn from the country following the announcement of this agreement, and will share that data with the UK,’ HMRC added.

‘There will be no clearance of past liabilities for those involved in criminal attacks on the tax system or for anyone whose Swiss assets are the proceeds of non-tax crime. Any person who has failed to disclose their Swiss assets when challenged will not be able to benefit from the clearance of past tax liabilities. HMRC’s ability to carry out investigations will be preserved: any person under investigation cannot benefit from the clearance of past tax liabilities.’