British Council hit by Russia tax bill

A court in Moscow is reported to have reinstated an estimated £2.3 million tax bill for the British Council.

The decision, reported to have been taken at the Russian capital's ninth arbitration appeal court on Thursday, revokes a lower court's ruling in October.

It is the latest twist in a long-running campaign by the Kremlin targeting Britain's cultural and educational outposts as part of a diplomatic feud with London.

The Russian government earlier closed two British Council offices, while President Dmitry Medvedev described the body as "a nest of spies".

The British Council has strenuously denied the allegation that it has failed to pay all taxes due to the Russian authorities.

It has been estimated that the sum demanded by Moscow is approximately £2.3 million.

Under the leadership of Vladimir Putin, the former president who is currently prime minister, Russia has accused British diplomats of spying. Its government also reacted furiously when the UK demanded the extradition of the businessman and politician Andrei Lugovoi for questioning in connection with the murder in London of Alexander Litvinenko, a former KGB agent. Mr Lugovoi, who has since become an MP, denies any involvement.

The British Council said that its lawyers were examining the latest court ruling.