British Council to challenge Russian tax bill

MOSCOW (Reuters) - The British government's cultural arm on Wednesday said it is appealing its Russian tax bill, a dispute that could rekindle a bitter row over the organisation that helped to sour ties between Moscow and London.

Earlier this year the British Council was forced to close its offices in two Russian cities and police questioned its local staff in what Britain's foreign minister described at the time as unacceptable harassment.

Both Russia and Britain linked the closure of the two offices to a diplomatic spat over the 2006 murder in London of former Russian security agent Alexander Litvinenko. Russia has refused to extradite Britain's chief suspect in the murder.

"We will complain, in accordance with the established procedure, about particular aspects of the tax demand with which we do not agree," the British Council said in a statement.

The Council said it had nevertheless already made the payment requested by the tax authorities, though it did not list the tax claim or the amount under dispute.

"The British Council is registered with the tax authorities, it regularly pays taxes in Russia and carries out all the demands of the Russian tax authorities in relation to its activities," the statement said.

The Council promotes British culture abroad and arranges educational exchanges. Some Russian officials have said in the past they suspect the British Council may be a cover for espionage, a charge the organisation denies.

(Writing by Christian Lowe; Editing by Stephen Weeks)