It is the largest tax-evasion settlement in history, according to George Osborne, who fleshed out a treaty with Switzerland which will ensure, he said, “that for the first time in our history money will be flowing from bank accounts in Switzerland to Britain rather than the other way around”.
However, the Chancellor was immediately accused of doing a deal with potentially major league criminals in a bid to bring back £5bn of unpaid tax from Switzerland.
While the treaty with Switzerland had been announced and agreed in principle before, the amounts involved only emerged on Wednesday.
The measure for “bilateral co-operation” to ensure proper taxation of UK individuals with assets in Switzerland comes into force at the start of next year. It will be a boost to the Exchequer to the tune of £330m next year and a whopping £3.1bn in 2013-14.
As part of the agreement, the Government will agree not to pursue the tax evaders.
Some tax advisers asked which individuals and banks were behind the £3bn, and questioned the sources of the money.
Cormac Marum, an adviser at Harwood Hutton, said: “The point is that anyone who has hidden money in Switzerland and not disclosed it is a tax evader. That is a criminal offence. Criminals should be prosecuted.”
Accountants draw a clear distinction between illegal tax evasion and tax avoidance by methods approved under the law.
Added Mr Marum: “Contrast this to the treatment of people who obey the law by shielding themselves from tax legally, but then get denounced.
“Unlike Starbucks, these people have broken the law. Shouldn’t they be named and shamed?”
The issue of tax evasion has been rising up the political agenda for the last few years. Banks have faced hefty fines for complex schemes which aid clients in skirting rules that apply to most depositors.
As part of a wider tax crackdown, the Chancellor said that “hundreds” of tax loopholes would be closed with a close look taken at the “abusive use of partnerships”.
The Government tried to show its commitment to the overhaul by saying that the Her Majesty’s Revenue and Customs is one of the Government departments that won’t see its budget cut. Indeed, it will be allowed to spend £77m more this year on pursuing tax avoidance.
Britain, he claimed, was also “leading international efforts to prevent the artificial transfer of profits to tax havens”, a sign that he intends to go after large corporations as well as wealthy individuals.