Scottish Widows, the life insurance arm of Lloyds TSB, has struck out at draft tax legislation on life insurers, saying that it is impossible to measure the full consequences because the industry was caught unawares.

This statement comes after the Association of British Insurers voiced worries that the ruling, which is another measure in the government's plans to eliminate tax dodging by 2008, was a 'smash and grab' on the savings industry.

The impact of the legislation has been largely disputed, with some life insurers claiming they will not be affected and others citing losses of up to £500m.

A spokesperson for L&A said: 'As this complex draft legislation was issued without any prior consultation, Scottish Widows is seeking clarification from the Treasury.

Sir David Prosser, group chief executive, commented: 'This draft legislation has been published without any consultation. The Government is proposing retrospective taxation on reserves which provide security for this industry’s customers.

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