Europe's biggest drug manufacturer faces a row with the US tax authorities over a $12bn (£6.9bn) tax bill.

GlaxoSmithKline is about to be hit with a new bill from the Internal Revenue Service of $4bn, bringing the amount under dispute to a total of $12bn.

The group said yesterday it expected to receive further 'substantial claims' from the IRS in relation to the way it records profits at its US subsidiary.

The Times reports that the group is already facing claims from the body of $2.7bn in unpaid tax for the period 1989-96, a $1.9bn bill for between 1997 and 2000 and interest of $3.7bn.

The IRS claims GSK avoided higher tax rates by moving US profits to the UK, where corporation tax is lower.

The company made the announcement as it revealed strong full year results, with profits rising 16% to £6.7bn on sales growth of 8%, up to £22bn.