UK drug giant GlaxoSmithKline faces a court battle with US taxmen over allegations it avoided levies due on billions of dollars in drug sales, it is reported.

The Wall Street Journal reported that both sides were preparing for litigation over a decade's worth of revenue from six best-selling drugs, including the ulcer drug Zantac.

The US Internal Revenue Service (IRS) has alleged that Glaxo's US subsidiary overpaid its European parent for the drugs, artificially reducing its US profits - and taxes - from 1989 to 1999.

GlaxoSmithKline said it was confident it had made provision for any tax liabilities.

Tax liability

A Glaxo spokesman said: "Our view is that the profits reported by the US subsidiaries and taxed in the US fairly reflect the activities carried out in the US operations.

"And we continue to believe based on external advice that we have made adequate provision for any tax liability that could potentially arise from disputes with tax authorities."

He said the company was hopeful that discussions between US and British tax authorities would "resolve these tax issues".

The company's US sales of the drugs totalled $29.5bn in the years in question, the Journal said.

The newspaper reported that the case grew out of an IRS audit that began in 1992 and a hearing that was held last year in US Tax Court in Washington.

The Glaxo spokesman said the next hearing date could be four to five years away.