Cash-strapped Formula One team Arrows has won a last-minute reprieve in its legal battle with the Inland Revenue.

Arrows Autosport, run by racing boss Tom Walkinshaw, with registered offices at Leafield Technical Centre, near Witney, said it had reached an out-of-court settlement with the taxman to avoid a return to the High Court in London, where the team was due to face a winding-up order tomorrow.

However, Arrows -- which employs about 250 people at Leafield -- still faces another winding-up order from driver Heinz-Harald Frentzen.