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Sun sets on Swiss account tax evasion

Sun sets on Swiss account tax evasion

Category: Offshore savings

Updated: 25/08/2011
First Published: 25/08/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Treasury has announced details of an agreement which will finally see it catch up with tax evaders who have money stashed away in Swiss banks accounts.

The historic deal with the Swiss Government is the latest in a line of measures aimed at tackling offshore tax evasion.

The agreement is set to resolve the long-standing abuse of Swiss banking secrecy whereby account holders have been able to use their accounts to conceal money from their own tax authorities.

They did not even have to pay Swiss tax.

The deal, which is expected to come into force in 2013, is forecast to secure billions of pounds of unpaid tax for the UK exchequer.

Under the terms of the agreement, existing funds held by UK taxpayers in Switzerland will be subject to a one-off deduction of between 19% and 34% to settle past tax liabilities, leaving those who have already paid their taxes unaffected.

As a gesture of good faith Swiss banks will make an up-front payment from Switzerland to Britain of CHF 500m.

Then, from 2013, UK residents with funds in Swiss bank accounts will be subjected to a new withholding tax of 48% on investment income and 27% on gains.

A new information sharing provision will also make it easier for HM Revenue and Customs to find out about Swiss accounts held by UK taxpayers.

The new charges will not apply if the taxpayer authorises a full disclosure of their affairs to HMRC.

"The world has changed for tax evaders," said Dave Hartnett, permanent secretary for tax at HMRC.

"A few years ago, nobody would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion.

"However, with the clear wish of Switzerland as well as the United Kingdom to ensure that tax is paid as it should be, we are embarking on a new course which preserves important principles for each jurisdiction, and will be fair for all UK taxpayers.

"We will secure significant sums of tax that some had thought we would never see. Not only does this agreement settle past liabilities and make arrangements to secure correct taxation in the future, it also gives HMRC more scope to find out about Swiss accounts."

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