The run-off sector is attempting to avoid being hit by VAT following the recent European Court of Justice decision on outsourcing by claiming to be a "special case".
The Association of Run-Off Companies (ARC) is claiming that the run-off sector should be treated differently by the government when it is deciding how to implement the ruling.
ARC treasurer Philip Grant told Insurance Times that the association will be lobbying Revenue & Customs in a bid to avoid VAT on outsourcing deals.
He said ARC would argue that the level of specialisation in the UK run-off market and the fact that outsourcing contracts are often signed for five years at a time mean it could be unfair to impose VAT across the board.
Grant also claimed that imposing VAT on the run-off sector would cause companies to re-locate operations offshore, to the detriment of the UK economy.
Grant said: "The run-off sector relies almost wholly on outsourcing. If it is hit by a 17.5% tax hike, we will see massive offshore migration."
He added: "The UK is home to a very specialised and skilled run-off sector, and outsourcing will mean that expertise will be lost.
"We are confident the government will appreciate the particular circumstances facing us, and make its decision accordingly."
According to ARC, run-off accounts for around £40bn worth of liabilities in the UK - some 25% of the current total of non-life liabilities.
