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23 Jan 2014 11:49am

UK/Swiss tax deal flops

George Osborne’s Swiss tax agreement has yielded just a quarter of its target this year

The agreement between the two countries, which came into force on January 1 2013 was forecast by the chancellor to raise £5bn over the next six years, with £3.2bn recovered in the 2013. Public finance figures published yesterday by the Office for National Statistics, however, showed just £800m had been collected in 2013.

This equates to a 75% shortfall despite the total amount of £3.2bn being factored into government income by the chancellor as part of Autumn Statement 2012.

The tax agreement, struck between the two countries in 2011, means UK taxpayers with Swiss bank accounts are liable to pay withholding tax on income and gains. HMRC warned account holders they must either provide full details or pay over a proportion of the money in their account and a future withholding tax.

At the time, exchequer secretary David Gauke said, “The days when hiding money in Switzerland in order to evade tax are over.”

The huge gap comes as no great surprise. In October, the Public Accounts Committee warned that the UK-Swiss tax deal would leave HMRC “£2.5bn light” this year, after HMRC directors Edward Troup and Jim Harra, admitted the yield would come up significantly short.

In August last year Switzerland struck a separate landmark deal with the US government to end a long-running dispute over banks that help US tax evaders.

The country and its secretive bank laws have been involved in a series of corporate scandals in recent years. Swiss bank UBS was fined a record £160m over its handling of the Libor interbank lending rate. And the country's oldest private bank, Wegelin & Co, shut its doors after pleading guilty to helping wealthy Americans avoid tax.

Raymond Doherty

 

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