GEORGE Osborne, the British chancellor, is close to signing a deal that will finally see tens of thousands of British nationals pay tax on secret Swiss bank accounts.

The landmark agreement will raise billions of pounds for Britain's battered public finances, but still allow Swiss banks -- and their clients -- to retain their highly prized confidentiality.

Dave Hartnett, head of HM Revenue and Customs, has told tax experts to expect the terms of a new agreement between Switzerland and Britain to be announced next month. Swiss banks believe the accord will be unveiled in the next fortnight.

Although the British government will not comment on the deal, tax advisers familiar with the talks said the terms include:

lA withholding tax -- one taken directly by the bank rather than paid by the client -- of 25 to 35 per cent on dividends and any interest earned on accounts, trusts or other investments owned by British nationals.




lA further levy on previously untaxed income held by British citizens, perhaps going back six years.

lAn agreement by the Swiss to give financial details about individual accounts, as long as HMRC can demonstrate those accounts are being used to evade British tax.

l New rules for Swiss banks that will oblige any British customer to show that he or she fully complies with the British tax system.

The money collected from the withholding tax will be wired direct to the Treasury, thereby allowing the vast majority of British account holders to keep their identities secret from HMRC.

It is not known how many Britons bank in Switzerland, but the Treasury has estimated that British citizens may hold as much as pound stg. 125 billion ($192bn) in Swiss bank accounts.

Bill Dodwell, head of tax policy at Deloitte, said: "This is a groundbreaking deal for HMRC -- it will bring in billions. I expect some people will have a pop at it, as British clients of Swiss banks will still avoid the 50 per cent rate of tax and keep their anonymity.

"But you have to be pragmatic. This will raise a lot of money and bring a lot of people back into the UK tax system."

The Treasury has suggested a deal could be worth between pound stg. 3bn and pound stg. 6bn, but the windfall may be even larger. A similar deal with Liechtenstein two years ago, initially expected to raise pound stg. 1bn, may yield three times as much.

The global community has grown increasingly hostile to tax havens, and Switzerland has become keen to strike a deal with Britain.

It is understood that substantial sums have been transferred from Swiss bank accounts to Liechtenstein since the 2009 deal with Britain.

Up to pound stg. 1.3 trillion of foreign money is deposited in Switzerland's banks. The country is keen to clean up the image of its most important industry, after years of criticism that it is a haven for dictators, drug barons and tax dodgers.