IBM said last night it was being audited by British tax officials for possible improper tax avoidance, but it called the audit routine.

IBM spokesman, Mr Rob Wilson was responding to a report by the Wall Street Journal saying IBM avoided paying as much as about $500 million in British taxes between 1991 and 1996 by raising to 12 per cent from 8 per cent the royalties its British unit paid to the US parent on goods and services sold in Britain.