Swiss bank accounts lose their appeal for offshore tax evasion

TAX-cheats will no longer be able to hide their profits out of reach in Swiss bank accounts because of a “historic” agreement with Switzerland to crack down on offshore tax evasion.

The deal to stamp out abuse of Swiss banking secrecy could bring in £5bn for the Treasury from 2013.

Chancellor George Osborne said it spelled the end of the days when it was “easy to stash the profits of tax evasion in Switzerland” but experts warned it could simply see people moving assets elsewhere.

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

And as a gesture of good faith, Swiss banks will make an up-front payment from Switzerland to the UK of 500 million Swiss francs (£384m), the Treasury said.

UK residents with funds in Swiss bank accounts will also be levied with a new withholding tax – a tax deducted from income at the source – of 48 per cent on investment income and 27 per cent on gains.

This will be accompanied by a new information-sharing initiative designed to make it easier for HM Revenue and Customs (HMRC) to find out about Swiss accounts held by UK taxpayers.

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

Mr Osborne said: “Tax evasion is wrong at the best of times, but in economic circumstances like this it means that hard-pressed, law-abiding taxpayers are forced to pay even more. We will be as tough on the richest who evade tax as on those who cheat on benefits.”

The agreement should come into force in 2013, following scrutiny by Parliament and ratification in Switzerland.