Lloyd's confirmed yesterday that it was still in talks with the Inland Revenue, trying to achieve a settlement on the future tax treatment of companies seeking to invest in Lloyd's for the first time in the market's 305-year history.
If the Inland Revenue refuses to grant attractive tax benefits it could jeopardise Lloyd's hopes of gaining more money for its market, which is in danger of collapse.
Lloyd's, which hopes to allow companies as well as individuals to invest from next year, has issued a consultative document on how it intends to treat the interest of investing companies.
'We are convinced that corporate membership has an important role to play in helping to secure capital for Lloyd's future and we believe that these proposals are fair and reasonable to individual and corporate members alike,' it said.
Potential corporate members, however, are unlikely to agree until they enjoy the same tax advantages as individual members of Lloyd's, who have many tax benefits as a result of their position as sole traders of the market.
Moreover, the leading architect of the plan, Lloyd's deputy chairman, Robert Hiscox, suggested after a formal presentation of the proposals that there may be no guarantee that companies that invest in the future will escape the liabilities of the past.
Lloyd's has been hit by losses of about pounds 5.5bn over the past three trading accounts and a further pounds 1bn of losses are in the pipeline for the 1991 account.
Lloyd's is determined that companies joining the market will not be liable for losses in the 1985 trading account and before. But proposals for the accounts bearing the worst of the losses between 1986 to 1993 are far from clear.
Usually, if the market is able to close its books the liabilities of previous accounts are rolled into the accounts of reconstituted insurance syndicates, which include new members.
But most of the loss-making syndicates have left their books open so new investors, for the moment, will not be affected.
Mr Hiscox admitted that some liabilities might fall on the new investors if the books were closed, but he expected that the new investors would take all possible steps to avoid this situation.Reuse content