Biffa’s £1.2billion takeover could be challenged by a landfill tax investigation.
Revenue & Customs is looking into the waste management company’s accounts which could lead to a £168million bill.
The company’s FTSE250 accounts show it has so far only earmarked £20million for it.
Review: Revenue & Customs review Biffa accounts which could lead to £168m bill
The investigation could also complicate an offer from Energy Capital Partners.
A City tax source said: ‘No buyer will like the prospect of paying £168million. They will no doubt want a very intensive detailed discussion on this subject.
Biffa’s latest market update said the maximum liability had increased by £15m, from £153m, while the minimum was £170,000.
No formal tax claim has yet been filed against Biffa, but accountant Ernst & Young has been recruited to advise the company.
Biffa said he thought he had a “solid defence”.
Biffa has been contacted for comment.