The Treasury is heading for a surprise windfall of up to £10bn from a crackdown on money secreted in foreign tax havens, the Chancellor George Osborne said tonight.
The cash from tax avoiders and evaders – due to be raised over the next four years – will be used to cut Britain’s £155bn deficit.
Officials calculate that an agreement with Lichtenstein, under which the Alpine nation is to open its books, will now raise up to £3bn over that period - £2bn more than originally forecast.
Talks were opened with Switzerland this month and the Treasury believes they will yield £3bn. The money would be raised through a “withholding tax”, a levy collected by the Swiss on behalf of the British tax authorities. According to one estimate, as much as £125bn of wealthy Britons’ money is salted away in Switzerland.
Officials disclosed that negotiations have begun with three other large unnamed tax havens over disclosure of British money invested there. They are confident of raising £1bn from each.
One is in the Caribbean, where the tax havens include the British Virgin Islands and the Cayman Islands, another British territory.
Mr Osborne, who was in Seoul for the G20 summit of world leaders, said: “We’re all in this together and that includes those who and try to evade tax. We’re in the process of striking a deal with Switzerland and more deals will follow.
“This will raise many billions of pounds which the previous government failed to do. This is tough, but fair.”
Officials said that the scrutiny on tax havens by the G20 had forced many of them to change their ways and fall into line. Britain has been at the forefront of the moves.
The Chancellor, under pressure to balance the nation’s books, ordered a tougher approach to tackling tax evasion on coming to office in May. “It is totally unacceptable,” one aide said.
Mr Osborne and David Gauke, the Treasury Exchequer Secretary, met their Swiss counterparts at the Treasury on 25 October to open the talks. “They have got the international message and realise there is growing pressure to act,” said one UK source. “We are at the start of the process but are confident of making progress.”
The target is to reach an agreement with Switzerland, a notoriously protective tax haven, over the next 12 months.
The Financial Stability Board (FSB), set up by the G20 to identify problems in the global financial system, is due next year to name the countries that refuse to co-operate in sharing supervisory information in line with standards set by the International Monetary Fund. The process could extend the FSB's remit to more than 100 countries from its current base of 20, and include offshore havens. It could test the board's independence from its political masters because some G20 countries could be on its "blacklist" unless they change their ways in time.