By Marcus Leach
The Swiss government and HM Revenue and Customs (HMRC) have agreed a landmark deal to tax money held by UK citizens in Swiss bank accounts.
The deal, in which account holders' identity will still remain anonymous, could see HMRC net between £3 billion and £6 billion a year, as HMRC try to increase their efforts in tracking down monies hidden in offshore accounts.
Swiss authorities struck a similar deal with Germany earlier this month as global authorities look to crack down on tax evasion.
"The world has changed for tax evaders," said Dave Hartnett of HMRC.
"A few years ago, nobody would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion.
"We will secure significant sums of tax that some had thought we would never see."
For many years the appeal of Swiss bank accounts has been that account holders have been able to hide money from their own tax authorities, without having to pay tax in Switzerland.
"The historic agreement will enable us to collect billions of pounds from those who have for too long evaded their responsibility to pay UK tax by abusing Swiss banking secrecy," David Gauke, Exchequer Secretary to the Treasury, said.
Under the new agreement, as of 2013, Swiss banks will tax UK citizen's accounts, transferring the money directly to the Treasury, but at the same time keeping account holders' details secret.
Depending on how long the account has been active those held at Swiss banks will be taxed between 19% and 34%.
Further to that, as of 2013 account holders will face an annual levy of between 27% and 48% on the income from their accounts, depending on whether it has arisen as capital gains, dividends or interest.
Those wishing to avoid taxation in Switzerland will only be able to do so if they declare their full finances to the HMRC.
Commenting on the deal Jonathan Russell, partner at ReesRussell and UK200Group member, said that many Swiss accounts had already been applying a withholding tax before today's announcement.
"HMRC have ‘discovered’ many of the overseas bank accounts over recent years and recovered significant amounts of tax and in recent years many Swiss accounts have already been applying a withholding tax," he said.
"To a degree the continued anonymity of the tax payer may actually make these accounts more attractive in certain quarters but this is a practical approach to increase the Government’s revenues. As an advisor it may be that it becomes an inconvenience for those tax payers who are already declaring these accounts in the UK, and in this respect, be counter productive."
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