Transport giant Stagecoach has won an £87.8m windfall after settling a long-running dispute with the taxman.

The FTSE 250 company said sticking points with HM Revenue & Customs on tax issues had been settled.

Stagecoach disclosed in its annual report that it had made a ‘gain of £87.8m in respect of the resolution of a number of historic tax matters with the tax authorities’.

In a detailed breakdown of its tax affairs, the company also reported a credit of £1.5m after corporate tax was cut to 28p in the pound. A source close to the company said the issue had been running for up to five years after the company underwent a major restructuring.

The tax win will be seen as a key victory for finance director Martin Griffiths. The annual report disclosed that Griffiths’ pay rocketed by more than 40% to £821,000 compared to £575,000 in 2006/07.

A former chairman of the Group of Scottish Finance Directors, Griffiths’ pay packet was made up of a basic salary of £360,000, cash and share bonuses, and non-pensionable allowances.

UK plcs often make large provisions in their accounts for unresolved disputes with HMRC. Vodafone set aside more than £2bn to cover the possibility of losing its controlled foreign companies wrangle with the government.