A landmark tax agreement between the UK and Switzerland now looks set to raise much less revenue than expected, according to an update from the Swiss Bankers Association (SBA) say Harris & Co accountants Northampton as part of their accountancy services to their clients.
Under the terms of the deal, heralded by Chancellor George Osborne last year as the ‘largest tax evasion settlement in British history’, the UK government anticipated raising £5bn over the next six years. The £3.2bn of revenues expected this financial year have already been included in the government’s borrowing figures.
However, the SBA said in a report last week that it is possible that less than £900m would be directly transferred to the UK. The association said that first indications suggested there were fewer untaxed UK assets in Switzerland than had been previously assumed, largely because many clients have resident non-domiciled status.
‘These clients are not liable to taxation in the UK and thus do not fall under the agreement. Furthermore, numerous UK clients have opted for voluntary disclosure,’ the SBA statement said.
The UK is likely to see some revenue as a result of these voluntary disclosures, although the details will not be available for some months.
In a statement, HMRC said: ‘The estimate for yield from the Swiss agreement took into account the likely balance between tax withheld by the banks and tax collected by HMRC directly from individual taxpayers following disclosure, as well as the taxpayers" tax status. More people have chosen to disclose their tax affairs to HMRC than expected, so the yield from this route is likely to be higher than anticipated. There is no reason to revise the overall yield estimate at this point.’
As part of the tax deal, Swiss banks made a prepayment of 500m Swiss francs (£348m) in January, which they can begin recovering only after 800m francs (£556m) had been paid to the UK authorities. The SBA said it was possible than either ‘none’ or only a ‘small part’ of this would be repaid.
The Office for Budget Responsibility has previously described the anticipated yield from the Swiss tax deal as ‘highly uncertain’ because of the lack of information about the value of the assets held by Britons in Switzerland.