Sunday, November 27, 2011

UK must renegotiate its useless UK-Swiss tax deal

We are delighted to see the FT reporting that the European Commission has threatened to sue Britain unless it renegotiates its wrong-headed and useless tax deal with Switzerland.
European Commission lawyers concluded that the bilateral deal, which recovers billions of unpaid taxes in return for protecting the prized secrecy of the Swiss banking system, is in breach of European Union laws that are tougher on tax evasion.

As a result George Osborne, chancellor, has been told that he must renegotiate with Berne to ensure the agreement is compatible with existing EU rules – particularly with regard to secrecy – or face a writ at the European Court of Justice."
Excellent news. We have already demonstrated how the UK cannot hope to get even a fraction of the money from the deal that has been trumpted by HMRC. And we don't tire of saying that nobody, anywhere, has found a specific fault with our analysis - even though the tax advisers who are currently drooling over the possibilities that emerge from all those loopholes have sought to play our report down.

Germany has already started negotiating. But why, we wonder? Note this, from our report:
"Not only are the loopholes in the UK-Swiss deal catastrophic, but the bilateral deal covers only the two countries. By contrast, the EU scheme effectively covers 42 jurisdictions, including most of the world’s big tax havens. This makes the UK-Swiss scheme far weaker."
The golden alternative for the UK is to put its weight fully behind the amendments to the European Savings Tax Directive, which will gather far greater sums of money than the Swiss deal ever could. And, at the same time, to take the kind of approach favoured by the U.S. and the Australians - bring the full force of law to bear on the individuals that are criminally evading taxes - and on those bankers and others who help them do it.

The UK has so far chosen to take the cosy, pro-secrecy, criminal-friendly approach towards the Swiss. It's not too late for a U-turn. It should scrap the deals from top to bottom, not renegotiate them.


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