Switzerland Hands Over Tax

The tax agreement between the UK and Switzerland, which was struck in August 2011 and came into force on 1 January 2013, has just delivered £342m to the Treasury in the first tranche of revenue from UK taxpayers in Switzerland.

According to HM Revenue & Customs (HMRC) this is the first instalment of a levy on these taxpayers’ accounts to cover arrears of tax, while current and future tax liabilities will be covered by a new withholding tax of 48 per cent on income.

Under the agreement, people with taxable assets in Switzerland have a choice of authorising their financial institution to disclose the details to HMRC or have the levy and withholding tax applied by the institution.

Until now, HMRC has only been able get details of interest payments on Swiss accounts by providing the Swiss with complete details of specific accounts, information that is rarely available.

Exchequer Secretary David Gauke said that the agreement with the Swiss government will deliver around £5bn of previously unpaid tax to the UK and added that offshore evasion costs the UK billions of pounds every year, which the Government is determined to tackle.

He said that one of the ways to do this is through information exchange, so this agreement makes it easier for HMRC to obtain information about UK taxpayers suspected of hiding money in Switzerland.

Chancellor George Osborne also hailed the payment and joked that it was the first time “that money due in taxes has flowed from Switzerland to the UK”, as the nation has been famously secretive about its banking arrangements.

In fact, its reputation for financial discretion has helped Switzerland build up a $2 trillion offshore financial sector. But, since the financial crisis, the country has faced an international campaign against tax evasion from governments with big budget deficits. The agreement with the UK follows a similar agreement struck recently with Germany.