A new scheme to incentivise councils to boost business is to be relaunched this year after a stand-off between the Scottish Government and the local government body COSLA resulted in an entire year's worth of payments being withheld.

The Business Rates Incentivisation Scheme (BRIS), launched in January 2012, was praised by business leaders as a "tentative first step" towards rewarding councils that find ways to attract increased business activity.

Under BRIS, the Scottish Government set a target for the level of business rates collected. If a local authority met their target, 50% of any additional money collected came back to the council.

However the scheme quickly became the subject of bickering between central and local government, as both sides disagreed on whether the Scottish Government was justified in using exemption clauses as a reason to raise the target figure withhold some of the cash that councils felt they were owed. The dispute centred on the Scottish Government's invocation of a "significant event" as a reason to withhold payments.

In a written answer to Conservative finance spokesman Gavin Brown MSP last week, finance secretary John Swinney said "We were unable to reach agreement with COSLA on the application of the business rates incentivisation scheme in 2013-14. As a result I made it clear that it would not apply in that year. Having secured agreement with COSLA on a revised scheme this will apply from 2014-15 onwards."

Gavin Brown said "Clearly the initial scheme was a dog's breakfast. This was a flagship policy in the 2012 local government campaign yet it has taken until 2015 to get it running. While things may now be resolved for 2014-15 onwards, it still means that an entire financial year has been shelved and treated as if the policy has never existed."

A spokesman for COSLA, which last week clashed with John Swinney over teacher numbers, told the Sunday Herald:

"Due to the issues in agreeing the 12/13 position, Government advised us there would be no targets for 2013-14 - and we have now agreed the scheme for 2014-15 onwards.

Only 12 out 32 Scottish councils qualified for BRIS payments in 2012-13. The biggest winner was Fife Council which gained £2.5m, followed by Highland (£1.3m) Clackmannanshire and Moray (both £1.2m).

Robin Presswood, Fife Council's head of enterprise said: "Fife's success is a testament to colleagues who are working hard to attract large investment projects to Fife, including Marine Harvest in Rosyth, Amazon in Dunfermline and Diageo in Kirkcaldy and Leven. Offering a one stop shop service to businesses and other initiatives including the introduction of the priority applications team planning has really paid off."