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Russian Court Dismisses Tax Charges Against British Council

The closed offices of the British Council in St. Petersburg

The closed offices of the British Council in St. Petersburg

MOSCOW (Reuters) -- A Russian court has thrown out most of the tax claims filed by authorities against the British Council, the British government's cultural arm, during a diplomatic row between the two countries.

As relations between London and Moscow deteriorated over the past two years, the Russian government forced the closure of some of the British Council's regional offices, saying they were not legal, and tax inspectors filed claims against it.

However, high-level ministerial contact between the two countries has now resumed and Britain sent a new ambassador to Moscow this month.

"The court recognized as invalid a decision from a tax inspection in the part where it filed income tax and value-added tax claims," the spokeswoman for the Moscow Arbitration Court said on October 17.

The tax claims had been issued in January, she said.

The British Council, which had earlier lodged an appeal against the fines, declined immediate comment. It said it would issue a statement later.

Britain has always insisted that the British Council's activities in Russia are fully legal.

Russia denies that the moves against the British Council are part of a harassment campaign and says its action has been aimed at enforcing legislation.

The row over the British Council became an extra irritant in Russia's uneasy ties with Britain which sank to their lowest level since the Cold War after the November 2006 murder of Alexander Litvinenko, an ex-state security agent turned Kremlin critic, with a radioactive substance in a London hotel.

Russia has repeatedly spurned Britain's demands to extradite former KGB agent Andrei Lugovoi, who London accuses of killing Litvinenko.