Chancellor George Osborne is arguing the UK's case for not paying the EU an extra £1.7bn in a meeting of EU finance ministers in Brussels.
Ahead of the talks, Mr Osborne said the sum being asked for was "unacceptable" and he would get a "better deal".
David Cameron has repeatedly said the UK will not hand over any money by the 1 December deadline.
A senior EU official has warned of opening a "Pandora's Box" if the surcharge is not paid.
Amid reports that the UK could be allowed to pay the bill in interest-free instalments, Treasury sources said Mr Osborne would continue to demand a cut in its size.
'On the agenda'Speaking ahead of the Ecofin meeting, Mr Osborne said: "The demand that Britain should pay £1.7bn by the 1st December is unacceptable. I wanted this on the agenda. It is on the agenda. I will make sure we get a better deal for Britain."
However, a final agreement is not expected to be reached at Friday's meeting.
But BBC political editor Nick Robinson told BBC Radio 4's Today programme that a compromise based on phasing in interest-free payments over a given time is one that "David Cameron will not be able to sell back home".
He added that "after the stance he has taken", Mr Cameron "needs the total figure cut rather than phasing in payments.
"If he doesn't get an offer of that, or George Osborne doesn't get it face-to-face in Brussels today, there will have to be more talks to get more concessions."
'Practical solution'The surcharge follows an annual review of the economic performance of EU member states since 1995, which showed Britain had done better than previously thought.
Elements of the black economy - such as drugs and prostitution - have been included in the calculations for the first time.
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Lord Hill: We need "practical solution" over tax bill
Last month, David Cameron reacted angrily to the bill presented to the government by the EU for £1.7bn (2.1bn euros).
Italy, Greece and Cyprus were also asked to make extra contributions, while France and Germany are set for refunds.
Lord Hill told the BBC: "It seems to me that this is one of those classic examples you get from time to time, where something that a group of people think are technical matters suddenly, and in this case for perfectly understandable reasons, become highly political.
"The sensible thing now is to try to calm the situation down, and to look at the facts, and to look at a practical solution to the challenges that various member states face."
The former leader of the House of Lords, who was appointed as European Commissioner for financial services last month, said the meeting of the Economic and Financial Affairs Council (Ecofin), would go some way to finding a "practical solution".
| Losers | Additional sum to pay |
|---|---|
|
Source: Leaked EU Commission document |
|
|
United Kingdom |
£1,676m |
|
Netherlands |
£506m |
|
Italy |
£268m |
|
Greece |
£70m |
|
Cyprus |
£33m |
Winners |
Reduction |
|
France |
£801m |
|
Germany |
£614m |
|
Denmark |
£253m |
|
Poland |
£249m |
|
Austria |
£232m |
Speaking last week, the European Commissioner for Budgets, Jacek Dominik, said EU members had approved the process by which the figures were calculated and it would be "extremely difficult" to change it.
"Never in the past was there a situation that such a decision was changed and implementation regulations have been changed because one of the member states has contested," he said, adding that "if you open this act for future negotiations you open up a Pandora's box".
'Synthetic anger'Conservative MP Ken Clarke, who served as chancellor in the 1990s, told the Today Programme on Friday that although it was "quite reasonable" not to pay a lump sum of £1.7bn by the 1 December, the UK did not default on its debts and a compromise will "depend on how good our case is".
He expressed confidence that Mr Osborne would negotiate a solution at the meeting of European finance ministers today, after there has been "a look at how the £1.7bn figure was arrived at".
Mr Clarke also said a lot of the anger about the bill was "synthetic", saying "it's all politics getting in the way of commons sense".
He added that if the EU was to be kept together as an economic entity "you have to pay your contribution and you have to have free movement of labour".
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