Stanlow Oil Refinery could be shut down as urgent discussions were being held with tax officials.
Bosses from the oil refinery in Ellesmere Port are in discussions with HMRC over a £356 million (€417 million) VAT bill, several UK based newspapers reported.
However, a spokesman for the parent company Essar said it has already repaid HMRC £547 million (€641 million) leaving a balance of £223 million (€261 million) , as part of the Government opt-in scheme available to all corporates in the UK.
Stanlow, is Britain's second largest refinery and supplies one-sixth of the country's road fuel.
It is owned by tycoon brothers Shashi and Ravi Ruia, through their company Essar Oil UK.
The refinery's VAT bill built during the pandemic under the Government's COVID-19 VAT deferral scheme. The company employs 1,700 people.
This follows the news that several petrol stations across the UK have had to close due to a lack of HGV drivers to deliver the fuel.
This caused panic-buying over the weekend of September 25-26 resulting in long queues as motorists rushed to fill up their cars despite pleas from the government to buy fuel "as usual".
The government is set to introduce measures to tackle the shortage of HGV drivers by temporarily lifting visa restrictions for up to 5,000 foreign drivers.
A spokesman for Essar said: "Further to an article published on The Times website, itself an almost identical article to one published a week prior by Sky News, Essar Oil (UK) Limited once again provides an update on its current financial position and on-going discussions with HMRC with regards its VAT commitments.
"Essar set out in detail its current financial status in a statement last week, in which it confirmed the considerable progress the Company had made to strengthen its financial position and agree new financing.
"As a result of that work over the past few months, Essar has $1.1 billion in liquidity secured.”
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