HMRC has admitted a significant shortfall in the amount raised as a result of an exchange agreement with Switzerland to target Britons using undeclared bank accounts, which is now likely to be only a quarter of the original forecast of £3.2bn.

Giving evidence at yesterday's Public Accounts Committee (PAC) hearing, senior HMRC officials Edward Troup and Jim Harra told MPs that £340m had been paid in January, with a further £440m raised this financial year, bringing the total recovered to £782m.

The HMRC executives admitted that forecasts of the amount to be raised by targeting Britons using Swiss bank accounts to evade tax had been 'inaccurate', but said this was due to the 'secrecy' surrounding the Swiss banking system. Troup said he had 'conveyed our concern about the amounts we were receiving' to Swiss officials.

Under the terms of the agreement there was an initial tax of between 19% and 34% on the total amount held in bank accounts controlled by Britons, followed by an annual levy of up to 48% cent on income produced by the same accounts. However, the Swiss Bankers Association has consistently warned that much less was likely to be paid over than anticipated, since some of the accounts are controlled by non-doms who are exempt from UK taxes, and other account holders have chosen to voluntarily disclose assets.

PAC chairman Margaret Hodge described the original HMRC estimate as 'an Alice in Wonderland figure' and calculated that HMRC would be '£2.5bn light' this year. Chancellor George Osborne included the original £3.2bn estimate in the public accounts in June, and the deficit is likely to have to be revised in his Autumn Statement next month.

During other exchanges, HMRC was accused of having a 'supine attitude' to international tax collection. Hodge criticised the department as 'institutionally incapable', given the £35bn tax gap currently, and said this would be far bigger if the tax arrangements used by international companies to reduce their liabilities were challenged more robustly.

During Troup's examination by the PAC, he suggested evidence presented by a Google whistleblower was being investigated. This includes a series of emails which seem to contradict the internet company's defence of its tax arrangements whereby sales negotiated by a team in London were booked via its subsidiary in Dublin to take advantage of lower rates of corporation tax.