FSB spokesman David Brown attacked the scheme saying it was too bureaucratic, and totally impractical. He said even Inland Revenue staff were having problems understanding it, a point highlighted in a recent report by the National Audit Office.
He said: "While it is encouraging that Raynsford now admits that there are problems, why has he taken so long to come to this conclusion, and how many small firms have suffered in the mean time?"
There has been a chorus of calls to change the scheme since its launch in November 1999. It was also criticised in the audit office report.