Protests are being sent to the government over plans to tax foot-and-mouth aid given to businesses hit during the disease outbreak.

Devon County Council has said it wants to see tax exemption on aid given to help businesses recover from the crisis.

The authority is writing to the Treasury, expressing deep concern over what is seen in the business community as a broken pledge.

The Treasury said the grants will be included in any taxable income.

It sends out a bad message to the rural community and suggests that government departments are not talking to each other

Christine Channon

The South West Regional Development Agency (RDA) paid out more than £11m to help more than 1,000 businesses hit by the foot-and-mouth crisis.

The RDA and the county council had been told that the government business recovery grants were exempt from taxation.

But now the Inland Revenue has indicated that these grants will be taxed, reducing them in effect by 20% to 30%.

Devon County Council leader Christine Channon said: "The council is dismayed by this sudden u-turn and the impact it will have on hundreds of small and medium-sized businesses in the county.

"After the severe battering our business community took, to take a kicking from the Treasury when many are still on their knees is a double whammy.

Devon County Council's Exeter headquarters

"It sends out a bad message to the rural community and suggests that government departments are not talking to each other."

The Inland Revenue admitted one of its officers may have made comments at the time about trying to make the grants tax free - but it denied this was ever going to happen.

But it also said that as the grants would be included in taxable income, it was not expecting people to pay thousands of pounds in cash.

It said that during foot-and-mouth many businesses showed losses, and as such would not be paying tax.