Swiss banks could end up over paying £350 million in an agreement to keep the anonymity of their British clients who have dodged tax over the years.
The banks agreed to pay the charge to settle a row over concealing tax with the British government.
However, many of the clients the bankers whose identities the banks argued so hard to keep secret are now opting to do their own deal with HM Revenue and Customs.
Despite this, the Swiss banks still have to pay the massive penalty payment unless the total paid by direct deals with HMRC tops £900 billion.
The payment is pushing many of the banks into the red – Credit Suisse has revealed the bank will book a £70 million loss due to the payment this financial year.
Highly ambitious target
The banks have also signed similar deals with Germany and Austria which will cost them even more cash.
The Swiss Bankers Association consider little or none of the £350 million levy will be recovered after conducting a review to identify British account holders. The banks now feel they have fewer British customers than they first thought.
SBA spokesman Thomas Sutter said the banks have no any untaxed UK assets and fewer had come to light than expected because many British residents were not liable for Swiss tax.
The banks also suggest Britain’s anticipated £3.2 billion tax take from disclosures like the Swiss deal is hugely ambitious.
“We do not feel we need to revise the estimate,” said an HMRC spokesman. “It’s right more people have come forward than we considered disclosing the full extent of their tax affairs.
Shifting balance
“But the calculation relating to how much the Swiss agreement would bring in included the money from the banks and that collected from taxpayers by HMRC, so although the balance is shifting, we do not believe the yield needs recalculating.”
Although HMRC has trumpeted the £3.2 billion figure as the likely amount that would be raised from the Swiss agreement, the Office of Budget Responsibility has long held the view that this was more of an estimate as no one outside the banks knows the full extent of holdings liable to British tax in Switzerland.
Meanwhile, HMRC has published factsheets explaining the options taxpayers have in disclosing their undeclared offshore accounts and the terms of the agreement.
Click here for the HMRC factsheet https://www.hmrc.gov.uk/taxtreaties/swiss-dis-factsheet.pdf
Click here for the HMRC Swiss Disclosure FAQ https://www.hmrc.gov.uk/taxtreaties/ukswiss-faqs.htm
