On the Swiss Bank deal

Ritchie has got all hot under the collar about the deal that was done with the Swiss banks.

Amongst the outcomes of yesterday’s Public Accounts Committee hearing in which HMRC were interviewed about their performance was the revalation that the UK – Swiss tax deal that was scheduled to pay the UK £3.1 billion this year may not deliver a quarter of that sum.

There’s a good reason for this too. Essentially, very little tax was actually due.

From day one I named this deal as naive and a deliberate act by the UK to undermine the European war on tax haven abuse. I argued the Swiss could not be trusted to deliver (as is now clearly proven to the case) and that the UK’s rule of law was undermined by allowing Swiss banks to operate parts of the UK tax system – with a tax rate discount applied to encourage abuse in the future. And I and others argued that this deal could not deliver the sums claimed for it.

We have been proven right, yet again. No wonder Margaret Hodge said it was time for HMRC to listen to the tax campaigners yesterday. Our ability to predict tax risk seems to be 100 times better than that of HMRC.

That however leads to the next obvious question, which is whether HMRC were wilfully blind on this issue, as I suggested many times in 2011 and 2012 when referring to this issue, or were just incompetent. I’d like to believe the latter. I remain to be convinced.

Fairly stron words from the Murphmeister there.

And here’s what actually happened. Murphy, the Tax Justice Network, Richard Brooks, they were all claiming that there was some vast untaxed sum in the Swiss banks. Which Britain should, obviously, start taxing.

So, off everyone went in order to find out how much there was in the Swiss banks which was not taxed and how much tax there could be gotten from it. So far so good. Then we found out that:

According to the Swiss Bankers Association (SBA), the deal does not apply to most UK nationals who keep their cash in Swiss banks because they are not domiciled in the UK.

There wasn’t actually that vast sum of cash to tax.

To put it in its most polite form. The claim was that there was $40 billion untaxed. This was an error.

In order for that money to be righteously taxable by the UK It had to be owned by UK citizens both resident and domiciled in the UK.

If you are resident but non-domiciled in the UK then you do not pay UK tax on foreign money that you keep in foreign. So, non-doms keeping cash in a Swiss bank is not UK taxable.

Similarly, if you are a UK citizen domiciled in the UK but non-resident your earnings are not UK taxable. So, Tim Newman’s cash from being an oil engineer are not UK taxable. And yes, some of those are indeed stashed in a Swiss bank.

The $40 billion estimate included (to give this the most generous gloss possible) all three types of UK citizen’s cash. That held by residents but non-doms and doms but non-residents which are not taxable and also that by residents and doms which was indeed tax evading and thus righteously taxable.

As it turned out the first two groups were the vast majority of this money. The third the minority: not all that much of a surprise as most people do obey the law most of the time.

We can thus see where the error was. It was in the original claims of how much tax was being avoided. Thus it’s Murphy, Brooks, the TJN, who were wrong. And it is now them who are screaming that HMRC got it wrong. Not so. There just never was that much money to tax. Which is why they’re screaming and obfuscating so much now. To make sure that no one thinks about this fact.

28 thoughts on “On the Swiss Bank deal”

  1. No matter how often and how emphatically he is proven wrong, all it seems to provoke is a furious denunciation of everybody else’s incompetence or outright malice.

    I hope those politicians who, oddly, laud this out of his depth in a paddling pool demagogue are taking note of how quickly he turns on everybody who has worked with him.

  2. Also, there would have been a fourth group: those who have paid tax on it, but still keep it in a Swiss bank. If I ever returned to the UK I’d keep banking with the Swiss mainly because they are a billion times better than the British high street banks.

  3. There is also the group of people like one client of mine, who got a strongly-worded letter saying half the balance in his account would be deducted as tax unless he could explain exactly *why* it was sitting there in a Swiss bank.

    So I wrote to point out that it was a current account, and the large sum in it was because having lived in Switzerland for several years he had just sold his house and moved back to the UK, and everything was on his return…

  4. In order for that money to be righteously taxable…

    Do you mean ‘rightfully’?

    Money is ‘righteously’ taxable when some prig with a fat neck says it is.

  5. For I am a jealous God and I shall strike thee down with a righteous vengeance

    Pellinor, you have been warned.

  6. “I have long argued the Swiss could not be trusted to deliver (as is now clearly proven to the case) and that the UK’s rule of law was undermined by allowing Swiss banks to operate parts of the UK tax system”

    OK. Now stay with me on this Ritchie. Those Swiss banks are somewhere we call “Switzerland”. Some other places we call “sovereign nations” regard Switzerland as being a “sovereign nation”. And so, in keeping with something us lickspittle capitalist tools call “the Rule of Law”, Switzerland – not us -gets to decide the rules under which its banks operate. Sometimes sovereign nations get together and agree something we call “a treaty”. Then both of these nations abide by the terms of these.

    Now I agree that some nations play by their own rules, these are called “Courageous States”. The thing is, these Courageous States struggle to get sovereign nations to deal with them. And they always end up pissing off one particular sovereign state so much that they get battered to the point they are no longer Courageous. (Take a trip to Kabul or Baghdadn you’ll get my drift)..


    No it fucking isn’t you little shit. You are making it up as you go along. Your figures diminish the back of the fag packet they are written on.

  8. Ironman, don’t blame Richie, blame the NHS and all the signs they put on fag packets these days. More than half the back on a pack of 30s, if you can still get ahold of that, is covered with health warnings and pictures of tarred-up blackened lungs.

    I was in a meeting with a technical director of our company who made a back-of-the-fag-packet comment, I pulled out my packet and showed him that there was not that much room left to do calculations, needless to say he was not amused and for me it was a CLS.

    Find another expression and leave the back of the fag packet calculation in the past.

  9. Ironman: I have no fear of the Invisible Pink Unicorn.

    For Murphy seems to be a follower of the IPU: he seems to be arguing that the fact that we cannot see the IPU is proof that it is indeed invisible, and if you’ve proven the Invisible bit then the rest follows naturally. Vero in unum, vero in omnibus.

    We cannot see any money hidden in Swiss banks, so it must be there. The more we look the more we fail to see, so the more there must be…

  10. He seems to be suggesting that his paymasters in the PCS, who work at HMRC, are incompetent fuckwits. Might be unwise?

  11. @ Jonathan

    I’m sure I remember a friend who works at HMRC telling me that most senior staff are a) not PCS members and b) think Murphy is a complete fuckwit.

    HMRC rank’n’file are, presumably, quite happy with their union shill attacking their organisation, so long as it’s always the bosses in the firing line.. which has, rather conspicuously, always been the case.

  12. The Thought Gang: my into too.

    I’m told there are two unions at HMRC: PCS, the lefty head-bangers who think UNITE are cowering poofs who don’t give Ritchie enough money and ARC, which represents senior staff and often “doesn’t share the PCS analysis”. Let’s just say they weren’t PCS members up in front of the PAC yesterday.

  13. For yet more high pendantry, there is a fifth group (was going to be the fourth but Tim Newman got there first) of UK citizens: non-resident non-doms, like me. Worth the mention because I think Ritchie is on record that people like me should pay tax to that country that (currently) sells me a passport, and that there are one or two countries that do tax on such a basis.

  14. Might there even be a 6th group? Those who, upon seeing a tax charge looming, have moved their money somewhere else? The size of that group ought to be estimable by the Swiss banks. Anyone any ideas?


    He is indeed a complete fvckwit, although whether this is innate or adopted to keep his paymasters happy is moot. He is also an insufferable sociopath (I mean here he is only able to function and interact with those who share his views, as expressed).

    However, his fvkwittedness is of a completely diiferent order to that of, say, David Icke.

    Murphy is listened to, and quoted by, a lot of people and institutitions, many of them having considerable influence.

    He is becoming some sort of hideous modern day Rasputin, and maybe equally impossible to kill.

  16. I’d say Titus Oates is an even better historical analogy:


    He suggests people are guilty of actual crime, but just pulls away when we get to the name.

    But Rasputin works for me too.

  17. It was hard, but not impossible, to kill Rasputin, BF. In fact, once the court turned on him he was fucked.

  18. As a UK citizen non-resident non-dom (although if I die you can be they’ll try to claim I’m dom. My surviving wife’s response will then be “erm, where? At what address exactly? And you can Foxtrot Oscar”) I was worried about getting caught up with this.

    Till I read the treaty and it quite rightly states that it applies to UK taxpayers. Which I am not. No matter what Richie might want.

  19. Tim;

    It is evident that your zombie supporters here are (a) dumber than wet paint, (b) as naive as a muppet or (c) both. Clearly the vast majority of wealthy Swiss bank clients use trusts, foundations and insurance wrappers peddled by the wealth management industry for purposes such as “inheritance planning” or “creditor protection”. Also the use of commercial purpose offshore companies is used in conjunction. Now listen up el dummies…. all these were, for no good valid reason, specifically exempted from the Swiss tax agreement. So of course 85% was going to escape. Jeez, a 10 year old kid could understand that. But you rather believe the Alpine concoction to justify the falure to collect taxes, that there are hardly any UK residents with bank accounts. So in retort, I expect you say say nobody uses trusts. Bwahhh ha ha. What a maroon.

  20. There is also the possibility that some people prefer not to have tax on interest earnings deducted at source and paid gross instead. That allows them to get the benefit of that investment income for a longer period of time and then pay tax on it when it is due. For large amounts of money this is a worthwhile thing to do. Nothing illegal about it just that you can choose to pay tax when it is due rather than each month when the interest is credited to your account.

  21. Mark Morris,

    But Tim’s point is still valid isn’t it, there is no tax due on people who use those structures?

  22. Mark, if the people calculating the “tax due ” as a result of the agreement were counting these structures which are not covered by the agreement, who are the dummies here exactly?

    It’s like Richard’s tax gap calculations based not on the law as it stands, but on the law as he thinks it should be.

  23. How dumb is wet paint and how much less dumb is it when dry?

    And is an ‘Alpine concoction’ another word for Muesli?

    Clearly this is going to be a morning for ontological exploration.

  24. Is Mark Morris a pseudonym used by Richard Murphy? Similar style of posts and both come across as complete fuckwits. Surely not a coincidence?

  25. @ Phil
    No, he/she is a Europhile equivalent
    ” EU Savings Tax Expert –
    Although I regularly consult with the EU Commission, not all my interpretations of the directive have been confirmed by them.”
    Self-acclaimed “expert on EU savings tax” who thinks he/she can determine what the law “really means” even if the law actually says something different.

  26. @ john77 and other sKeptics,

    I don’t think you want to get into a match on who and who is not an expert. Besides me being the key architect on the savings tax directive (and the 3rd review in process) I consult to many competent authorities on tax loopholes. Noticably Germany rejecting Rubik due to its loopholes as per my testimony http://www.bundestag.de/bundestag/ausschuesse17/a07/anhoerungen/2012/098/Stellungnahmen/14_-_Mark_Morris.pdf which the UK seems blissfully unaware of why they collected 10% of their target. After reading my report, and you think I am mistaken then you can resume your cynical attack.

    Those muppets who say any old trust, insurance wrapper, commercial offshore company, etc. should be exempt are clearly deluding only themselves. http://www.economist.com/blogs/schumpeter/2013/10/trusts-and-financial-transparency.

    Personally I don’t give a hoot if EU residents pay their taxes. However if a tax agreement offers withholding alternative in place of automatic exchange of info, so be it. However if that agreement has huge loopholes, then the authorities should know they are being duped.

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