UK life insurers could be hit with tens of millions of pounds of costs if they are forced to comply with tough regulations on tax evasion being drafted by US authorities.
Companies such as Aviva, Old Mutual and Prudential would be forced to report the tax details of their US account holders every year under proposals being drafted in Washington. The life insurance industry is anxious about the potential cost of overhauling information systems if it is caught up in the wave of red tape.
The Association of British Insurers (ABI) yesterday went into battle to try to win the exemption of UK life firms from the rules. Peter Vipond, director of taxation at the ABI, said: “UK insurers represent no significant risk to US tax revenues and we are keen to avoid unnecessary and onerous costs on the industry that will ultimately be borne by all policyholders.”
The trade body has written to the US Treasury and Internal Revenue Service. It will attend a series of meetings with policymakers over the coming weeks to point out that savings sold by UK life insurers are taxed by HM Revenue & Customs, and US residents make up just 0.1 per cent of UK life policyholders.