SCOTLAND'S biggest whisky distiller is gearing up to fight HMRC over a £107m bill for unpaid tax.

Diageo, which counts Johnnie Walker, Talisker and Lagavulin among its brands, has been asked to pay the money under new laws designed to crack down on companies hiding profits offshore.

However, the firm believes the tax - introduced in response to complaints over companies such as Google and Facebook - has been wrongly applied and insists it will fight to have the money returned.

Under the scheme, companies have to pay the sum demanded by HMRC up front and only then begin negotiations on whether it was justified.

A spokeswoman for Diageo said that this would be a long, drawn-out process which may not be concluded until next year. She added that the firm had already paid millions in direct taxes to the UK.

A statement released by the company to investors said: "Diageo has learned today that HM Revenue & Customs intends to issue preliminary notices of assessment under the new Diverted Profits Tax regime, which came into effect in April 2015.

"Diageo understands that this will require Diageo to pay additional tax and interest of approximately £107 million in aggregate for the financial years ended 30 June 2015 and 30 June 2016.

"Diageo does not believe that it falls within the scope of the new Diverted Profits Tax regime. Accordingly, Diageo will challenge the assessments when they are received."

It continued: "In order to do this, it will be necessary to pay the full amount assessed up front and then continue to work to resolve this matter with HMRC.

"The payment of this sum is not a reflection of Diageo’s view on the merits of the case and, based on its current assessment, Diageo considers no provision is required in relation to Diverted Profits Tax."

The drinks giant reported a six per cent rise in Scotch whisky sales earlier this year, driven by its Johnnie Walker and Buchanan’s brands in North America, Europe, Africa, Latin America and the Caribbean.

The company’s Scotch reserve brands, which include Johnnie Walker Black Label, also grew by six per cent.

A HMRC spokesman said: “HMRC makes sure all taxes due are paid. We don’t discuss identifiable taxpayers or businesses.

"The Diverted Profits Tax (DPT) is targeted at contrived arrangements used to divert profits away from the UK. The DPT applies a rate of 25% from 1 April 2015."

He added: "The DPT is designed to change behaviour, in order to counter contrived tax arrangements used by some multinationals to shift their profits to other countries.

"As well as preventing the erosion of the UK tax base, the legislation provides a strong incentive for groups to have discussions with HMRC about their high-risk transfer pricing transactions.”