I disabled video processing on my TV and the issue improved quite a bit. There were numerous different processing video processing enabled.
However, there is still some lag. Not as bad as before. I intend to connect my 24" Dell monitor and check if it is still the TV which is the issue.
Will also try running SPDIF from SAT to AVR as suggested by Cosmin Char. But If I remember it correct, I had attempted this before.
Within my AVR I do have a set delay option, but I come from the school of thought that these should be in sync!