A tax battle has erupted between GlaxoSmithKline and the US Internal Revenue Service over how certain inter-company financing arrangements at the pharmaceutical business should be treated.

The IRS claim for tax an interest at the end of 2007 was sitting at $680m (£348.9m). The claim from the US tax authorities relates to the period from 2001 to 2003.

GSK said it would 'vigorously contest' the IRS claim.

'GSK believes, supported by external professional advice, that this claim has no merit and that no adjustment is warranted,' the company said in its final results announced yesterday.

The company continues to be in dispute with HM Revenue & Customs too, over transfer pricing and Controlled Foreign Companies tax issues ranging from 1994 until now.

The firm said HMRC had yet to formalise its claims. GSK said it hoped to resolve the issues through discussion, but warned that there continued 'to be a wide difference between the Group and HMRC positions' that may need to be settled by litigation.

Further reading:

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Pharmaceutical giant pays $2.3bn to settle US tax dispute