The Treasury's estimates of raising £5 billion after taxing the undisclosed bank accounts in Switzerland are likely to fall short, according to BDO's head of tax Stephen Herring.
In this year's Autumn Statement, George Osborne said we should expect to raise £5 billion over the next six years from undisclosed bank acoounts in Switzerland belonging to UK residents. In addition to a one-off levy relating to past tax evasion, the agreement provides for a withholding tax on future investment income and gains arising in Switzerland. While the Treasury is expecting to target £3 billion alone next year from the initiative, Herring expects this will prove too ambitious.
'For a number of years interest rates have been very low, and in Switzerland, so you are talking about massive sums of money to generate liabilities of this order,' he said.
He also questions whether UK residents with Swiss bank accounts will opt for non-disclosure. 'There has never really been a huge incentive to evade tax because you can keep on the right side of the law by declaring modest income and pay more modest tax on that income.'
The government also announced an agreement with the United States which the Autumn Statement documentation claims is the first of its kind anywhere. This will significantly increase the amount of information on potentially taxable income automatically exchanged between the two countries, which the government hopes will set a new standard on tax transparency in order to tackle evasion. The government said it would look to conclude similar agreements with other jurisdictions.