Friday, February 14 12:51:18
Lloyds Banking Group faces a £1bn tax demand in the UK related to billions of pounds of loss as it wound down its defunct Irish subsidiary, according to reports in the British press this morning.
The lender revealed it was warned in the second half of last year that the UK tax authorities were not happy with its treatment of Irish losses to offset its tax bill, prompting a legal dispute between Britain's largest retail bank and HMRC, according to the Telegraph's banking expert, Harry Wilson.
If the case is decided in HMRC's favour, Lloyds has said its tax bill will rise by £1bn, with the bank forced to pay a further £600m of tax, as well as write off a £400m deferred tax asset that it would currently be able to write off against future profits, he said.
In a statement to investors the bank said: "The group does not agree with HMRC's position and, having taken appropriate advice, does not consider that this is a case where additional tax will ultimately fall due."
The disclosure of the tax dispute came as Lloyds published its full-year results, which showed the lender had made a pre-tax statutory profit of £415m, reversing a loss in 2012 of £606m.