Officials from HM Revenue & Customs (HMRC) told the public accounts select committee it has collected a quarter of the amount expected to be raised by targeting Britons who avoid tax by hiding their money in Switzerland.
The revelation is problematic for chancellor George Osborne, who pre-emptively entered the full £3.1bn sum into the public accounts this June. This helped reduce the deficit, even though at that point very little money had been collected.
Labour MP Margaret Hodge, who chairs the select committee, said the original estimate was an “Alice in Wonderland figure” and asked why the taxman is “being so ineffective at pursuing this debt”.
The original deal between the Swiss and British governments was agreed in 2011. It required Swiss banks to impose an initial tax of between 19 and 34 per cent on the total amount held in bank accounts controlled by Britons, with the money paid directly to the UK authorities.
In addition, from this financial year onwards the banks will also impose an annual levy of up to 48 per cent on income produced by the same accounts.
But the Swiss Bankers Association has since warned there may be substantially less untaxed British money in the country than originally thought.
Some of the target accounts have turned out to be controlled by non-doms who are exempt from UK taxes, while many individuals have voluntarily disclosed their assets to the British authorities to avoid charges.
The £780m includes an initial one-off £340m paid in January, with a further £440m raised this financial year.