Lloyds Banking Group has lost the latest battle in its fight to avoid a £54m tax bill.

HBOS Treasury Services, which was taken over by Lloyds, was found by a tax tribunal last month to have set up a scheme for the purpose of tax avoidance. Lloyds said that it would appeal the decision.

Back in April that tribunal had allowed the bank to keep the proceeds of what it termed “highly artificial” transactions, however the case was referred back to the tribunal by both HMRC and Lloyds, reported the Guardian.

Judge Howard Nolan dismissed the argument that the scheme, set up in 2003, was designed for commercial purposes. He said that the emails shown to him “all confirm that this project was the acceptance by Treasury Services of a marketed tax avoidance scheme”.

An HBOS spokesman said: "We believe we acted entirely properly over the transaction in question. However, we cannot discuss this case further as we are likely to appeal the decision and therefore legal proceedings are ongoing."