Osborne's targeting of overseas tax havens 'appalling deal for UK'

Panama and the British Virgin Islands will be the Chancellor George Osborne's next targets as he extends his crackdown on tax havens used by rich Britons to salt their assets away.

HM Revenue and Customs will aim to reach information-sharing agreements with Panama and the Virgin Islands similar to the one with Switzerland announced on Wednesday which will net the Treasury more than £5bn in unpaid tax.

After targeting bank accounts in Switzerland and Liechtenstein, HMRC will now turn the spotlight on wealthy Britons who use "disguised ownership" to keep the taxman at bay. It is believed that substantial sums of tax are being evaded by owners of property in London who hide their identity from the UK authorities. HMRC is looking closely at countries which have strict secrecy laws about the legal ownership of companies as well as banking.

Tax havens are under mounting pressure from other countries to bring in more transparency.

Although British ministers hailed the deal with Switzerland as a historic breakthrough, campaigners warned yesterday that it would not go far enough. Richard Murphy, director of Tax Research UK, said people with Swiss bank accounts would pay less tax than they would have done in the UK. He argued that it allowed Swiss secrecy to continue and would undermine EU negotiations for a tougher deal.

Mr Murphy said: "It's an appalling deal for the UK. The one-off tax of 34 per cent is much lower than they would have paid in the UK and in fines for avoiding it. This Government is deliberately letting these people off."

But David Gauke, Exchequer Secretary to the Treasury, insisted there was no prospect of the Swiss abandoning bank secrecy completely and the deal was the best one possible. "It means that the days of being able to squirrel their money away in Swiss bank accounts are over for British residents," he said. The minister said that if Britons moved their money to another country, the UK Government would be told by the Swiss where it was going. "There are fewer and fewer opportunities for tax evaders," he said.

Phil Berwick, director at the tax law firm McGrigors, said: "This is a landmark deal. Switzerland is seen as the holy grail of tax havens. If wealthy individuals are not safe in Switzerland they cannot really consider themselves safe anywhere. The days of relatively risk-free tax evasion are over."

The Coalition Government has stepped up the pressure on Britons holding money in Jersey by bringing in a new penalty of 200 per cent of the tax evaded by people who do not disclose money held there.