He is a wag, isn\’t he?
Approximately £100bn–£125bn of British investors\’ money is believed to be in Swiss banks.
The Treasury said earlier this week that the agreement, due to be hammered out in the new year, would bring in extra revenues currently held in Swiss bank accounts beyond the reach of the UK exchequer. It is understood Treasury minister David Gauke, who will lead the negotiations, expects to raise more than £1bn.
So, interest rates are low, half of the interest being paid would (or possibly should) be paid in UK tax, 1% of the assets sounds not all that far from what should be due in tax actually.
It\’s worth noting that within the EU we have very similar deals: you\’ve a bank account somewhere you can say, well, I\’ll pay some (I think it\’s 15%?) tax rate on my interest but don\’t tell anyone or you can get your interest gross but they tell the taxman.
Oh, and Switzerland is an independent country and yes, they do offer absolutely the same deal to Swiss residents and Swiss citizens. So it\’s not just a for foreigners thing here.
Then we\’ve got Ritchie:
Richard Murphy, head of Tax Research, said: \”No indication is given as to how these accounts are to be regularised. Indeed, there is no prospect they can be because the £40bn or so of evaded assets will not have to be declared by name by the Swiss. In that case there is no prospect of UK interest or penalties being charged.
\”In other words David Gauke has just announced his intention to sign a total tax amnesty for UK tax evaders who have used Switzerland. Given that penalties and interest would have added well over 100% to the tax bills it is highly likely that all these evaded assets should have been due to HM Treasury. But Gauke looks like he will give away the whole lot.\”
He\’s assuming that all of that money in those accounts avoided tax in the first place and that therefore 40% or whatever of the total £100 billion should be paid in tax.
That\’s one hell of an assumption to make really: but it gives Murph a nice number to wave around and get his name in the papers.
On that assumption: can we think of any way in which assets can pile up in a Swiss bank, owned by British taxpayers, and yet not be subject to British tax?
Well, actually, yes, we can. Imagine that for some years someone stops being a British taxpayer. Goes off to work in Dubai, just as one example. Expat earnings stack up in Switzerland, entirely free of any liability to UK tax at all. Contract over, our expat engineer returns to the UK. Those earnings in Switzerland are still not subject to UK tax: now that he\’s resident in the UK again the interest on them is liable to UK tax, yes. But the capital sum only becomes liable if he tries to bring it into the UK.
So, we\’ve an entirely legitimate route, process, for a UK resident to have a bank account in Switzerland, the interest upon which is taxable in the UK, the capital not.
Note, please, that I don\’t claim that this makes up all the £100 billion. But Murph is making the seeming claim that none of it is.