Enterprise Inns, the tenanted pub operator, said it continued to investigate the possibility of converting to a tax-efficient real estate investment trust (Reit), despite failing to meet the criteria laid down by HM Revenue & Customs (HMRC).

The company admitted that it had failed to persuade HMRC that beer sales to tenants should be treated as so-called “wet rent”, which might have qualified it for Reit status without the need to split its property assets from the operating business.

Ted Tuppen, chief executive, said the company was now exploring whether an internal restructuring might overcome the problem. “It’s a very complex issue, but we’re still talking [to HMRC].

“Our financial advisers still seem confident that we can qualify for the scheme,” he said.

Enterprise said that plans to raise a further £750 million of debt would remain on hold until next year pending the return of market stability. The move would allow Enterprise to continue buying back its own shares, spending an estimated £450 million.

The group’s pre-tax profits fell from £315 million to £301 million in the year to September 30, although after adjusting for disposals and exceptionals, earnings per share increased by 15.8 per cent to 39.6p.

Underlying earnings per pub increased by 6.2 per cent to £68,200, although Mr Tuppen said that he remained cautious over future prospects because of the possible impact of the smoking ban during the winter months and a deterioration in consumer confidence.

He blamed rising food, fuel and mortgage bills for creating “a climate of uncertainty” for consumers.

Mr Tuppen said he expected market conditions to drive an increase in pub failures. A review of Enterprise’s 7,800-strong estate had resulted in the decision to sell 96 unviable pubs for alternative use.

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