A businessman's victory after a lonely five-year tax battle will cost the Government at least $450 million a year in lost revenue. Dr Henry Yu Tat-ching successfully challenged an Inland Revenue claim that he owed $157,914 in tax on severance payments he made to his employees when he closed his Hong Kong factory in 1990-91. The ruling, which will 'have a far-reaching effect' means the Government will no longer be able to collect tax under Section 16 (1) of the Inland Revenue Ordinance. 'This is of considerable importance to the Inland Revenue Department, reaching far beyond the particular facts of this case,' Crown prosecutor Lynda Shine said. 'There will be a substantial revenue loss to the Government of millions of dollars.' Ms Shine said a 'conservative estimate' would put the loss at $450 million per year. But with more and more manufacturers leaving the territory, the amount could be 10 times as high, she said. The Court of Appeal yesterday refused the Commissioner of Inland Revenue's request to take the case to the Privy Council. But the commissioner will consider going direct to London to seek 'special leave from the Privy Council', Ms Shine said. For five years, Dr Yu, 65, has single-handedly taken the case through revenue tribunals and two High Court hearings. He argued his own case and won each round. 'I would not have won if I had been a lawyer or an accountant,' Dr Yu said. 'If I had been, I would have known what I was getting into and not started the fight. I have had a lot of sleepless nights.' Dr Yu's father founded a stainless-steel hardware company in 1929, but rising costs drove Dr Yu to close the Hong Kong factory and move it across the border. When the tax bill on the severance payments to his 123 employees arrived, Dr Yu, who holds a doctorate in engineering, said: 'It offended my logic.' If the Privy Council rejects the Inland Revenue appeal, the only route left to it would be a legislative amendment. But that is the last thing on Dr Yu's mind today. 'I'm heading to Los Angeles for a rest . . . a well deserved rest,' he said.