BRITAIN'S life and pensions industry is facing a £150 million bill to prepare for a variation in tax between Scotland and the rest of the UK.
But while most firms north of the Border - which would have to find £60 million of the bill - have taken steps to tackle the issue, their counterparts in England have preferred to concentrate on the Millennium bug and European monetary union.
The failure of many life and pension companies to consider the impact of different tax regimes on their administrative systems is revealed in a new study by the business analysts, PA Consulting.
Gary Miles, head of the team which compiled the report, said: 'It's the straw that broke the camel's back.
'This is not a massively expensive deal in the large scheme of things but if an individual company needs to spend £5 million in a little over a year that's a substantial amount on top of other horrible things they are having to deal with.'
According to PA Consulting, if the Scottish parliament exercised its power to vary the basic rate by up to 3 per cent, upwards or downwards, pension firms would have to amend their systems to avoid reclaiming too much or too little tax on behalf of customers living in Scotland.
The earliest point at which the tax rate could change is the third quarter of next year but a survey of chief executives and tax directors identified a lack of awareness, particularly among English-based companies.
Mr Miles said the failure of many firms to respond to the issue was due to uncertainty. 'Nobody knows when the extra tax is going to be raised so nobody knows when they have to be ready,' he said.
Mr Miles said Scottish-based firms had shown a greater level of awareness. 'They have people on the problem and are putting plans together.'
The survey identified the average cost of preparing for a tax variation at £5.5 million, with one leading company putting the cost at £10 million.
The cost to the UK industry as a whole is put at £125 million to £150 million, considerably higher than previous estimates, with Scottish firms picking up about 40 per cent of the bill.
