Taxation - Revenue wages war on insurers
The Inland Revenue’s battle against Lloyd’s of London to secure greater taxable profits could escalate into a full-scale war with insurers, industry experts have warned this week.
Only days after Lloyd’s secured a victory against the Revenue at the City General Commissioners tax tribunal over the issue of whether names should be forced to discount their future tax liabilities, Lloyd’s tax department has been told that the Revenue plans to appeal against the decision.
‘The Revenue is going to express dissatisfaction,’ Lloyd’s senior tax manager Nick Godden told Accountancy Age. ‘It will then take the decision about whether to appeal to the High Court.’
CGU’s head of taxation Mark Field said that the Revenue failed in its bid to force discounting on the general insurance industry more than a decade ago, and hoped that this would dissuade the government’s tax arm from trying again.
But recent moves by tax authorities in Germany to introduce discounting for tax purposes has sent shockwaves through the domestic insurance industry in the expectation that the Inland Revenue will target all insurers if it can secure a victory against Lloyd’s.
Field warned this would be disastrous for the UK and the sums at stake would force insurers to launch a defensive attack on the Revenue.
Association of British Insurers head of tax Benedict McHugo said: ‘We would be worried about any prospect of change to the current regulations.’