Bidders participating in the race for £3.6bn auction for Angel Trains are grappling with questions of how to overcome complex rules, contained in the Finance Act, designed to stop companies buying leasing businesses purely as a tax-avoidance strategy.

After being allowed capital allowances for tax purposes against their investment in new trains when rolling stock companies were privatised, Angel's owners , the Royal Bank of Scotland, may be lumbered with a £600m tax toll on selling Angel, which makes about £100m in profits a year, the Telegraph reported.

The burden would be passed on to the winning bidder. The company may then seek to offset the tax losses against profits in other parts of their business, but this could fall foul of Schedule 10 of the Finance Act.

Bidders are trying to find ways of offsetting the tax losses but the risk is that HMRC could view this as an anti-avoidance measure.

Further reading:

£600m Angel Trains tax hurdle may derail bids

Report points finger at Angel Trains