Revenue set for High Court discounting clash with Lloyd's.
Lloyd’s is set for a multimillion pound High Court battle against the Inland Revenue next year over the contentious issue of discounting liabilities which could cost names £350m in extra tax payments. The move follows a high-profile tax tribunal decision by the City general commissioners, which challenged the Revenue’s right to demand that tax paid by names on reinsuring liabilities at the end of an accounting period, should be discounted. Despite hopes that the matter had been settled, the tax authority decided to pursue the matter by expressing dissatisfaction – the first stage towards a full appeal. Lloyd’s senior tax manager Nick Godden said: ‘It would not take long for the Revenue to take the case to the High Court, but we would have to appeal if it won.’ The long drawn-out nature of such complex legal actions will dismay the names who will be unable to finalise their tax affairs from 1994 until an agreement is reached. Lloyd’s assessment is that about 10,000 individuals are at risk because they cannot calculate their tax liabilities and could find themselves out of pocket if the rules change. But moves towards harmonisation could mark the death knell for discounting throughout the insurance industry.