The breakthrough tax agreement between Switzerland and the UK, which is expected to raise billions of pounds for the UK, has been signed in London.
The agreement ensures funds of UK taxpayers in Switzerland face a significant one-off deduction of between 19% and 34% to settle past tax liabilities.
From 2013, a new withholding tax of 48% on investment income and 27% on gains applying to those who have not previously admitted having these assets will ensure the effective future taxation of UK residents with funds in Swiss bank accounts. The new charges will not apply if the taxpayer authorises a full disclosure of their affairs to HM Revenue & Customs.
The Government has already announced a new power to find out about Swiss bank accounts held by UK residents and further strong safeguards for the UK.
Exchequer Secretary, David Gauke, said: "This is an excellent agreement which tackles a problem many people thought would never be solved.
"Working with the Swiss Government we have delivered a highly effective solution which will benefit both countries and recover billions of pounds of unpaid tax for the UK."
HMRC Permanent Secretary for Tax, Dave Hartnett, said: "The world is shrinking fast for offshore tax evaders and this agreement will ensure that we know where money that flees Switzerland is heading. We won't be far behind."
The agreement includes the following provisions:
* A powerful anti-abuse clause will prevent the promotion of avoidance by Swiss banks
* A programme of audits, overseen by a new UK-Swiss joint commission, will ensure that banks are complying with their obligations
* Switzerland will collect data on the destination of funds withdrawn from the country following the announcement of this agreement, and will share that data with the UK
* There will be no clearance of past liabilities for those involved in criminal attacks on the tax system or for anyone whose Swiss assets are the proceeds of non-tax crime
* Any person who has failed to disclose their Swiss assets when challenged will not be able to benefit from the clearance of past tax liabilities
* HMRC's ability to carry out investigations will be preserved: any person under investigation cannot benefit from the clearance of past tax liabilities.
The agreement is now available on the HMRC website at http://www.hmrc.gov.uk/taxtreaties/ukswiss.htm and will be considered by Parliament in due course.
