MG Rover faces questions over its tax affairs, it has emerged.

The company's accounts reveal two significant and unusual tax issues that have arisen. Administrators PricewaterhouseCoopers are apparently challenging the company's group relief arrangements, the rules whereby subsidiaries' losses can be offset against group profits.

The Phoenix Four also face a £1.7m IHT bill in relation to their pension fund arrangements, structured through an Employee Benefit Trust (EBT), the vehicles currently under attack by HM Revenue & Customs.

IHT bills are applied in various instances to close companies as a way of preventing wealth being passed down generations through family businesses.

The company's financial statements disclose the possible bill from HMRC, as well as the fact that Deloitte, the group's auditors, have qualified the accounts.

The accounts also contain a writedown for the use of tax losses arising from the EBT payments, following last summer's Dextra decision, which established that such payments were not deductible against profits.