Moray Council has suspended the business rate payments of traders left furious after being charged extortionate sums because of IT delays.
The local authority collects the tax on behalf of the Scottish Government, but has been unable to apply the relief measures announced by SNP ministers earlier this year because the correct computer software is yet to be installed.
The fiasco left some traders in the hospitality industry paying ten times what they should be, because a 12.5% cap on their bills cannot be applied.
Pub and hotel owners mounted complaints last week as funds taken for June, at the uncapped rate, devastated their finances.
The council has now suspended direct debits from the worst-hit companies in an effort to ease the strain on their coffers.
Economic development committee chairman, John Cowe, said Holyrood finance chiefs should “applaud” Moray Council for taking the bold step to protect traders’ purses.
Mr Cowe added: “I have fought these sharp non-domestic rate increases alongside local traders since they were announced, and the council is doing everything it can to help people through this difficult time.
“This delay in applying the cap is entirely outwith our control.
“One method we have of relieving the financial burden on businesses is to suspend direct debits, and that is the step we have taken.
“I would hope that the Scottish Government would applaud what we have done in trying to help businesses.”
Monthly direct debits for firms which have applied for rates relief have now been halted until the software is in place to ensure that the reduced sums are withdrawn from accounts.
Mr Cowe added: “It will all come out in the wash, if anyone has overpaid then that will be refunded.”
Graham Fleming, who runs Lossiemouth’s Beach Bar, has seen the rateable value of his premises soar by 216% following an assessment based upon his turnover last year.
His bills are poised to rocket from £13,500 to £42,000 in 2018.
But the temporary cap announced by Derek Mackay in February means that he will face a maximum increase of only £7,400 this year.
Mr Fleming lashed out at the council last week over its inability to apply the relief measures, as he was charged £1,900 for the past two months instead of the £616 he should have been.
Yesterday, Mr Fleming said council accountants should apologise for failing to notify traders of the delays.
He added: “This would have been less stressful if the council had let us know about it, instead of leaving us in for a shock when the higher sums were taken.
“Canceling the payments is a positive move, but I’m still dealing with a much larger problem in getting the value of my property re-assessed.
“As things stand, I will still have to pay that £43,000 sum from next year and that could have a terrible effect on the business.”
Manager of the Mosset Tavern in Forres, Gordon Brailsford, paid out an extra £2,000 on business rates in May and June because of the software delays.
Had the 12.5% cap on rises in the hospitality sector been applied, he would have paid out only an extra £275 each month.
Mr Brailsford has also welcomed the move to ease the strain on his business.
A council spokesman said the authority hopes to have the correct software in place “soon”.
He added: “Following that, we will ensure that applications for transitional relief are processed promptly and revised bills are issued.
“Our suppliers have been doing their best to keep up with demand from other local authorities who find themselves in the same position.”
The Scottish Government declined to comment on whether the council’s decision to stop accepting payments would bring the authority into conflict with ministers.
A spokeswoman said: “The detail of this relief has been known since mid-March and it is up to local authorities to administer.
“We have supported councils to process applications and reflect the relief in final rates bills.”