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Revenue dilutes anti-avoidance measures

The Inland Revenue has watered down a series of tough anti tax avoidance measures aimed at Britain&#39s battered life insurance industry.
But accountants warned that life offices are still likely to face higher tax bills at a time when many are grappling with huge losses caused by the worst stockmarket conditions for a generation.
The Revenue&#39s measures will make it more difficult for life insurers to offset tax on gains on investments which have performed well, such as property, against stockmarket losses.
The new rules would have required life offices to declare to the Revenue if they had sold equities in a company and then bought them back within 30 days. The move was designed to stop life offices using bed and breakfasting techniques to duck tax but critics feared it would leave life offices facing an administration nightmare.
Insurers using loans secured against future profits to boost solvency also faced being hit with extra tax bills.
But yesterday, as part of the Budget, the Revenue said that it had brought the declaration limit down to 10 days and said it would review its proposals on solvency loans. The move follows intense criticism from accountants who said the original proposals could have severely damage life offices&#39 ability to write long term savings business.
PricewaterhouseCoopers head of insurance tax Anne Hamilton says: &#34Life insurers are still likely to have to pay more tax but the Revenue has made concessions. I still have a number of concerns, though, and we will have to see what they put in the finance bill.&#34
ABI head of tax and regulation Peter Vipond says: &#34It is fair to say that tax bills will still rise but it is looking better than it did. The Inland Revenue has come forward with some improvements. We are pleased that they have listened to us.&#34

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