FALL IN SWISS TAX EXPECTATIONS
Britain is likely to receive little more than half of the £3 billion-plus expected from an agreement reached with Switzerland to tackle offshore tax evasion, HM Revenue and Customs has told MPs.
Chancellor George Osborne’s 2012 Autumn Statement forecast the taxman would collect an additional £3.12 billion as a result of the agreement sealed the previous year, under which Switzerland undertook to provide information about British taxpayers with money deposited in the country’s banks.
But HMRC’s director general of business tax Jim Harra told the House of Commons Treasury Committee that the actual amount recovered is now expected to be “reduced substantially” to around £1.7 billion, in part because of wealthy individuals moving their assets elsewhere in the world to avoid being caught by the new arrangement.
“It was a groundbreaking agreement at the time it was entered into and it obligated the Swiss either to disclose information about bank accounts or – if their customers were not willing to do that – to pay withholding tax to the UK,” said Mr Harra.
“The forecast of how much we would receive under that agreement has reduced substantially. I believe that over the lifetime of the agreement, we now expect it to be £1.7 billion, which is significantly less than we expected.”
Committee chairman Andrew Tyrie pointed out that the cross-party panel of MPs had been “sceptical” about the initial estimate, prompting the response from Mr Harra: “You were right and we were not.”
Mr Harra said that HMRC had had to “adjust some of our estimates of how much money was offshored in Switzerland by UK taxpayers and how much of that represented evasion”.
And he added: “It was also a concern we have had all along that, as the Swiss agreement began to bite, people would move their money elsewhere.”
Mr Harra said that the UK had secured provisions requiring the Swiss authorities to provide information about cash apparently being moved abroad to escape the agreement and was leading efforts worldwide to introduce automatic exchanges of tax information in the hope of closing down “safe havens” for tax evaders.
“I can assure you that, to the extent that the fall in estimated yield from the agreement is a result of people moving that money, we are after that,” he told the MPs.
