POLITICS

George Osborne Mulls 'Super-Tax' For British Money In Swiss Bank Accounts

02/12/2014 10:27 GMT | Updated 04/12/2014 16:00 GMT
Ian Walde/Bloomberg via Getty Images

Britons who have their money stored in Swiss bank accounts risk having their savings wiped out by HM Revenue & Customs in an unprecedented "super-tax", the Huffington Post UK understands.

The plan comes as the UK government struggles to get its hands on income stored in Switzerland, after signing a tax deal that it said would recoup up to £7 billion, but has raked in just over £1.1 billion.

Under proposals being considered by HMRC, Britons with money stored in Swiss bank accounts face being hit with a 200% penalty in March 2016 if they do not declare it to the taxman. Such a move would allow the Tories to politically counter Labour's "mansion tax" as a way to go after the super-rich.

In addition, Chancellor George Osborne is expected to use his Autumn Statement on Wednesday to launch a further crackdown on tax avoidance.

Melvyn Langley, from Accura Accountants, told HuffPostUK: "Basically HMRC is saying if you're not going to be honest and they have to root you out, why are we going to give you credit for complying?"

According to Langley, the Swiss banks will likely bow to pressure from HMRC to let them access their British clients' hidden money, who are themselves not going to be alerted about this due to the banks' secrecy.

"The Swiss banks still have to remain anonymous, but they'll capitulate in due course," Langley warned. "That to me is a definite. They'll find a lot of pressure."

An HMRC spokesperson confirmed that it was looking at changing the potential penalties for accounts in foreign countries "on the basis that to be in Category 1 (100% penalties) jurisdictions will need to have signed up to the new Common Reporting Standards", but refused to be drawn on the idea of a 200% penalty as "we are still consulting on this matter".

Switzerland is currently in category 1, meaning the highest offshore penalty is 100%, so this would mark a major ramping up by HMRC of its efforts to get its hands on money in Swiss accounts.

The proposal was cautiously welcomed by Tony Smith, from the UK Uncut anti-tax avoidance campaign.

"If people are using Swiss bank accounts for the sole purpose of avoiding paying tax which is owed here, then of course that money should be pursued and reclaimed," he said. "The real question is whether this government is serious about clamping down on tax dodging by the super-rich. So far they have offered little evidence to show that they are."

However, leading anti-tax avoidance campaigner Richard Murphy said that HMRC's potential "super-tax" on Swiss bank accounts was a "somewhat hollow" threat.

"I welcome this move, but recognise it as a negotiating ploy alone," he told HuffPostUK.

"At present anyone with a Swiss bank account can make disclosure with ease through the Liechtenstein Disclosure Facility (LDF) and face a 10% penalty. The threat made is somewhat hollow as a result."

A spokeswoman for the Swiss Banking Association said: "With the Swiss-British withholding tax agreement of 2013 all bank accounts of British taxpayers in Switzerland have been regularized. The agreement, which entered into force in 2013, has solved the problem of untaxed funds of British taxpayers on Swiss bank accounts.

"Clients either pay a withholding tax, which is deducted directly from their account and transferred anonymously to the UK, or they must disclose their account details."

"It should be noted that the proposal the UK authorities are consulting would be applicable to all countries. Switzerland is among the 89 jurisdictions that have committed to introduce automatic exchange of information based on the common reporting standard (CRS) for 2017 or 2018."

However, Langley dismissed the SBA's statement as "ambiguous", explaining: "What the Swiss are doing is to deduct tax on investments and gains post-2013.

"HMRC still wish to get account holders to declare. At present to deal with the LDF after 2013, credit is given for tax already deducted, However after March 2016, penalties will be much higher and therefore individuals that end up being caught suffer the greater penalties, be it 100% or even the possibility of 200%."

See also:

5 Awkward Out Of Context Tory Tax Quotes