The Association of British Insurers has called on the Treasury to drop its obsession with 'revenue neutrality' on its plans to overhaul the taxation of foreign profits.

The government wants to drop taxes on inbound dividends, but wants to tighten up anti-avoidance rules elsewhere to make up for the tax loss.

'It is vital that the government does not pursue revenue neutrality, which invariably means complex and costly anti-avoidance measures, in a way that imposes more burdens on business or restricts business development in the UK,' Stephen Haddrill, ABI director general, said in a letter to chancellor Alistair Darling.

The body believes the review is important to keep the UK competitive.

A 'surprisingly high proportion' of the insurance industry had moved to very low tax regimes, Haddrill added.