Sep 30 2011

Swiss-UK Swizz: the past record is even worse than I feared

Posted by: Nick Shaxson in: Thoughts

Private Eye has another excellent short article on p29 of in this week’s edition, complementing my recent Guardian article (and more to come from me quite soon) but with a much better headline: Swiss Swizz. I would love to reproduce it all, but can’t, so, first, here’s a snippet which shows Private Eye at their understated best:

“The whole process will be audited by the Swiss tax authority, which, claimed Hartnett, “has a pretty fearsome reputation for the way in which it audits Swiss banks”.  It is not a reputation that has spread far and wide, and whether Swiss tax inspectors will be so keen on chasing money on behalf of a foreign country is also uncertain, to say the least.”

But now here’s a real killer.

“Under an existing agreement between the UK and Switzerland that provides for tax details to be shared, the Eye has discovered under FoI [Freedom of Information] laws, Switzerland has not provided a single piece of information off its own bat in seven years (even Jersey, Guernsey and the Isle of Man have been more forthcoming).”

Another shocker. These kinds of agreements are supposed to be the backbone of the international transparency system. Which just goes to illustrate how ineffective it all is.

P.S. the Private Eye article doesn’t seem to be online, though it is worth reading if you can find it. Their earlier one is also a good ‘un.

8 comments so far

Alien Edouard 10rd October, 2011 1.34 pm

Nick – does Private Eye also report about how many request for assistance were made to the Swiss tax agencies?

The Swiss’ obligation to provide assistance and/or information is conditional on them receiving a request, which itself must comply with a number of conditions: it must be in respect of a specific taxpayer, must describe the information being sought, must include the name(s) of the financial institution(s) that may possess that information, and it must describe the precise tax purpose for which the information is being sought.

Nick Shaxson 10th October, 2011 11.59 am

AlienEdouard, I am checking to find out the answer to your questions. And you are quite right about the incredibly tight conditions that are set on information exchange, which just goes exactly to show what I have said: these information-exchange agreements are only a bit better than useless.

Alien Edouard 10th October, 2011 1.09 pm

I get it that Private Eye did not bother to ask this question itself (otherwise it would have reported about it in its article), which just shows what kind of low-rent journalisitc organization it is….

Nick Shaxson 10th October, 2011 11.50 am

I happen to know that they did ask this question. The answer to your earlier question is ‘seventeen.’ Just goes to show, doesn’t it?

Alien Edouard 10th October, 2011 6.43 pm

Nick – how many of these requests were accepted and declined, and if they were declined, on what grounds.

It shows only one thing: Private Eye is clearly misleading its readers by failing to indicate that the main reason the Swiss provided little information is that they were barely asked for any. But hey, as long as they sell that trash I guess they don’t care.

Nick Shaxson 10th October, 2011 9.07 am

AlienEdouard you are clearly very angry with Private Eye. You might ask yourself why the Swiss were asked for few details. Because you have to know what you are looking for before you ask for it! Which just goes to underline my points about how useless the ‘internationally accepted standard’ for information exchange is. And because Switzerland historically fell back on their ridiculous ‘tax fraud’ category. Given that UK HMRC has stated that the large majority of UK stashes in Switzerland are undeclared, you can see where the problem is, can’t you?

Alien Edouard 10th October, 2011 12.48 pm

Nick – I am not angry at Private Eye, because I barely know about it. The first time it ever came to my attention was in Christoper Hitchens’ recent piece in Vanity Fair. However, I generally despise the journalistic standards of reporting of the (far-) left, of which this seems to be a prime example.

Regarding Switzerland, let’s agree on something and disagree on something else, shall we.

I accept that the pre-2009 distinction between tax fraud and tax evasion was indeed more than objectable. However, that distinction was removed from the all revised DTA in 2009. Switzerland is now using the standard agreement that has been agreed internationally, through negotiation between (mostly) democratically elected governments. You may have a problem with this, but it is no longer specific to Switzerland, since this standard is used by the vast majority of countries around the world. If you are going to bark, chose the right tree to do it at.

Finally, I would suggest that the fact that the UK tax agency could only come up with 17 requests in 17 years just shows two things: 1. that it is a lay, sloppy, incompetent group of professionals, and 2. that you and others are in any event vastly overstating the scale of the problem.

Do you have an answer to the question of how many of these requests were accepted and declined, and if they were declined, on what grounds?

Nick Shaxson 10th October, 2011 12.32 pm

AlienEdouard, Switzerland has indeed changed the basis on which it will offer administrative – although only to a select group of countries. And as I think our discussion has made clear, these agreements are hardly worth the paper they are written on. Second, people will laugh at you if you call Private Eye ‘far-left.’ It criticises everyone, left and right – it gets more insider scoops than the newspapers, and it’s read by every politician and journalist in the country. Try it, you might like it. And I don’t think they got an answer to how many replies there were, incidentally. They found out that there had been precisely zero spontaneous exchanges of information per year.

Well, HMRC itself estimates that there is 80-100 billion pounds of undeclared – yes undeclared – money held by Swiss banks. So don’t complain to me about ‘understating the problem’ – complain to them. Or complain to Helvea. The 17 requests in 7 years shows that for some reason they aren’t making the requests. I would guess it’s because the agreements are useless.

So there you go.

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