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The UK government is under pressure to clamp down on tax relief on bribes paid overseas by UK multinationals, after provisions in the anti-terrorism bill, outlawing corrupt payments by UK companies to overseas officials came into force on February 14 2002, as part of the UK's compliance with the OECD Anti-bribery Convention.

Campaigners claim the Inland Revenue approach to tax relief is part of this lax approach to eradicating corruption and that its practices must also be updated. Transparency International, the anti-corruption campaign body, wants urgent action to stop the "clearly widespread" practice of tax relief being granted on overseas bribes.

But the Revenue claimed the "circumstances under which bribes might be allowed for tax purposes [under the existing law] are very tightly defined". They would qualify "only if they are revenue in character, made wholly and exclusively for the purposes of the trade and . . . if no part of the bribery whatsoever takes place in the UK".

The Revenue said it would "consider whether any changes are necessary" to its guidelines to its inspectors. But it claimed it was "not aware of any evidence that UK taxpayers are paying bribes to foreign officials, nor is there any question of us allowing them to claim tax deductions for them".

However, Andrew Silberberg, a solicitor at Tite & Lewis, the law firm associated with accountants Ernst & Young, said the new corruption laws meant a "whole swathe of business practices left untouched will now be encompassed".

Another lawyer, who did not want to be named, claimed "huge amounts" were allowed to UK companies as tax relief on bribes.