Last December, two British citizens were arrested on suspicion of hiding money in Swiss bank accounts to evade paying UK taxes.
These arrests signal the start of HMRC’s crackdown on the use of offshore tax havens. The Revenue first obtained access to details of offshore bank accounts in 2007 and is expected that more arrests will follow as HMRC clamps down on tax evaders.
HMRC has been encouraging taxpayers to make voluntary disclosures about their offshore accounts in return for lighter penalties. The two Brits have yet to be charged but HMRC is no doubt hoping that the possibility of prosecution will encourage more people to come clean about the interest they earn on offshore accounts.
It is thought that the arrests came after HMRC analysed a list of people who banked with HSBC in Switzerland. The list was stolen by an HSBC employee and given to the French authorities. HMRC then sent hundreds of letters to wealthy UK taxpayers who were believed to hold Swiss banks accounts, advising them to disclose their assets.
For a long time Switzerland has been a favourite tax haven for the rich because of its tight secrecy laws. Up to £125 billion worth of British money is thought to be hidden in Swiss bank accounts.
However, that situation could be about to change. The UK and Swiss government’s signed an agreement last October to share more tax related information. The two nations are also devising new ways to stop clients salting away assets in Switzerland.
Tax evasion is a major headache for the government. Experts estimate that the Treasury loses £14 billion every year from these practices. Last year, the Treasury allocated an additional £900 million to HMRC to close the tax loopholes and investigate people suspected of tax evasion and tax avoidance.
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: Thinking by Vimages
