Insurers in tax avoidance row
Treasury introduces anti-avoidance legislation for life insurers that Legal & General says will cost it up to £500m
The Treasury has been attacked for a ‘smash and grab’ raid on insurers.
The tax measure, the Treasury says, is an attempt to stop companies reducing
stated profits through various reserving tricks. These will be terminated as of
last week, when the changes were announced. The measures themselves will be
outlined in the finance bill next year.
The insurance industry has reacted with shock to the news, and Legal &
General has claimed it could face a bill of as high as £500m as a result.
The Treasury, meanwhile, is annoyed at the suggestion that this was a ‘smash
and grab’ raid, with a spokesman saying: ‘these are targeted measures aimed at
stopping unjustifiable pieces of tax avoidance. People with genuine concerns are
welcome to discuss them with us as the draft legislation is prepared.’
The insurers have complained about a lack of consultation on the issue, with
the Treasury saying it does not consult on avoidance issues.
Mike Warburton of Grant Thornton said that the Treasury did sometimes consult
on avoidance legislation – such as the pre-owned assets tax – but not always:
‘They didn’t used to do any at all,’ he added, saying that consultation
procedures could often take time and involve ‘a particular procedure’.