This follows the withdrawal of services by Charterail, the group which was offering a combined rail and road transport service, last month. It has now announced it is seeking to challenge BR by lodging a complaint with the European Commission.
Mr Branson had said his Virgin group would provide a network of services with refurbished InterCity trains starting with a pilot scheme next summer linking London, Edinburgh and Glasgow.
Now he has discovered that charges for the use of the track and stations would be prohibitively expensive and that under existing rules he would have to compensate BR for lost revenue.
A BR spokesman said yesterday: 'We are under a legal duty to provide a service with due regard to efficiency, safety and economy. That means that we have to charge an economic rate for use of our services. Of course, all this will change under privatisation.
'We have a good relationship with Mr Branson and he understands the constraints under which we are working.'
Charterail is more critical of BR's policies. It says that BR was charging too much for the use of locomotives and crew, which meant that its prices were not competitive with road haulage.
Charterail, which ironically is part owned by BR, is now hoping to negotiate cheaper rates with BR which will enable it to restart its services.