By Chas Roy-Chowdhury, head of tax, ACCA
The UK government are calling it a ‘victory’; critics are saying it’s unfair to honest taxpayers. So, which is the UK-Swiss tax deal?
It’s actually a bit of both, as Saffrey Champness’ Ronnie Ludwig points out here. Those hiding funds from the taxman overseas still won’t be paying the full whack, but they will, for the first time, be paying something. It brings to mind the saying ‘a bird in the hand is worth two in the bush’.
This is actually as good a deal as the Treasury and HMRC could have got. The Swiss were never going to give up banking anonymity in one fell swoop, but this deal is the first chink in the armour. Some have said that the deal means the UK is giving up tax sovereignty; this is a bit of an over-reaction and misses the bigger point: it’s better to have something than nothing, and the deal leaves the door open for prosecutions after 2013.
Certainly, if I had money held in a Swiss bank account that I hadn’t declared I would be very nervous right now, anonymous or not. HMRC are allowed to ask the Swiss for the account details of up to 500 individuals per year; for those with Swiss accounts it’s like playing Russian Roulette with more than one chamber loaded. It’s not a lottery I’d like to be part of.
The deal could cause some with Swiss accounts to move their money elsewhere, but tax evaders are starting to run out of friendly havens thanks to some good work by the Treasury and HMRC.
So, is this a fair deal for UK taxpayers? No, not in the normative sense. But is it a realistic deal? Yes, it is, and it’s an important step towards getting HMRC a significant part of the money that it’s owed. HMRC have come in for a lot of criticism recently over all sorts of issues, but here they deserve some credit.