It appears the UK Swiss tax deal may only deliver about £900m as opposed to the £3.2bn predicted, leaving Chancellor Osborne with a significant shortfall in his deficit funding predictions.
In 2013 a one off levy of between 21% and 41% of the balance is due to be applied to Swiss accounts held on 31 December 2010 that remain open on 31 May 2013.
From 2013 onwards, a rate of 48% withholding tax will then be applied to investment income, 40% on dividend income and 27% on gains received in the account going forward. The charges can be avoided through the disclosure to HMRC of the account, together with the payment of associated taxes.
It seems that only £340m has been received so far falling far short of the predicted take of £5bn over the full life of the scheme.
The Swiss Banker's Association commented:-
“First indications from selected banks in Switzerland show that there are fewer untaxed UK assets in Switzerland than had been previously assumed. This is mainly due to the fact that 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, which comes as no surprise given the latest developments in Switzerland with regard to the announced adoption of a global standard for the automatic exchange of information.
As a result of these two developments, less tax than expected is being transferred to the UK by means of the one-off payment. The possibility can therefore not be ruled out that either none or only a small part of the banks' guarantee payment of CHF 500 million will be recovered.”
It appears that a cash strapped UK Exchequer, egged on by the exaggerated claims of tax lobbyists, have seriously overestimated the amount of tax evasion taking place.
Some have claimed the money has moved or failed to be identified but this is highly implausible, a surge of funds would be detected, as all major centres now all have crimes legislation and would report to the authorities as suspicious any such movements of cash whether in individual names or in trusts.
HMRC have said direct disclosure is higher than expected and may result in more cash collected via that route. This seems most unlikely as disclosure probably means non-doms where no tax is due, or a lower liability is involved than the scheme terms.
Of course people should pay their taxes. But it is time to focus on the real issues of the day; trade, economic stimulus and job creation, as opposed to giving the voting public false hope of a painless panacea, based on illusory pots of gold at the end of false rainbows.