The general reaction to HMRC’s announcement that it has collected only £747m so far from the Swiss/UK tax agreement has been that it is a ‘flop’.
Rather than viewing the situation as a disappointing performance, Withers’ Zurich-based tax partner Judith Ingham sees it more as one of unrealistic expectations. The government hoped to recover £3.2bn, but there are several reasons why this was always unlikely:
HMRC simply does not have the information to make proper estimates in this sort of scenario, so its prediction was always going to be a wild guess;
the UK/Swiss agreement allowed an opt-out for resident non-doms. HMRC never really knew in the past how many there were and, though its information will have improved over recent years, it is still hard to know the precise numbers or indeed what proportion would opt out;
discretionary trusts were not within the scope of the agreement and it was hard to know what number of assets would be held in trusts; and
most wealth planning professionals encouraged taxpayers to use the Liechtenstein disclosure facility (LDF) as a way to become compliant, rather than the UK/Swiss agreement. The tax take from the UK/Swiss agreement should not therefore be looked at in isolation, but should be considered with the take on the LDF (which has been much more successful than predicted.
The general reaction to HMRC’s announcement that it has collected only £747m so far from the Swiss/UK tax agreement has been that it is a ‘flop’.
Rather than viewing the situation as a disappointing performance, Withers’ Zurich-based tax partner Judith Ingham sees it more as one of unrealistic expectations. The government hoped to recover £3.2bn, but there are several reasons why this was always unlikely:
HMRC simply does not have the information to make proper estimates in this sort of scenario, so its prediction was always going to be a wild guess;
the UK/Swiss agreement allowed an opt-out for resident non-doms. HMRC never really knew in the past how many there were and, though its information will have improved over recent years, it is still hard to know the precise numbers or indeed what proportion would opt out;
discretionary trusts were not within the scope of the agreement and it was hard to know what number of assets would be held in trusts; and
most wealth planning professionals encouraged taxpayers to use the Liechtenstein disclosure facility (LDF) as a way to become compliant, rather than the UK/Swiss agreement. The tax take from the UK/Swiss agreement should not therefore be looked at in isolation, but should be considered with the take on the LDF (which has been much more successful than predicted.
