THE battle over controversial rates hikes has taken a further turn after it emerged pubs, restaurants and hotels will face significantly higher bills than the cap promised by ministers.

Business leaders have said that inflation will see the promised ceiling of a 12.5 per cent increase to 14.75 per cent, which will see many operators forced to stump up thousands of pounds more than anticipated.

The hospitality sector said many business had been left surprised by the development, which it said only emerged when the regulations were published, and would communicate the concerns of the trade in forthcoming meetings with ministers.

One prominent figure in the licensed trade said the impact of inflation on bills was "not in keeping the spirit of the agreement" announced in parliament by finance minister Derek Mackay in February.

But the Government has insisted that it had been clear from the outset that the cap was in "real terms" as had been the case with previous transitional relief schemes.

The licensed trade, already reeling from lower sales, has argued it has been unfairly hit by the revaluations, which were not designed to raise overall revenue.

Mr Mackay responded to protests at the end of February by announcing a cap of 12.5 per cent for one year, although at that time, many companies in Glasgow had yet to receive their revalued rates, which have now been published.

It also emerged in recent days that the cap would not be automatic and that business will have to apply for the relief, sparking further claims by industry leaders of trade confusion and poor communication.

Marc Crothall, of the Scottish Tourism Alliance, said: "At the time of the announcement the inflationary implications were not made clear, which was unfortunate, and this has taken many businesses by surprise.

"The correct position is set out in the Statutory Instrument which was published on 16th March. The Scottish Tourism Alliance (STA), the British Hospitality Association (BHA) and the Scottish Licensed Trade Association (SLTA) have this week communicated the concerns over the confusion being raised by members of industry to the Scottish Government and we are currently awaiting further response.

"The tourism coalition of the STA, BHA and SLTA have already met with the Cabinet Secretary and the Barclay Review and have two meetings scheduled with the Finance Minister later this month. At these meetings they will take the opportunity to present further evidence of the immediate financial concerns of businesses in the tourism sector while applications for the capped relief are lodged and processed by local authorities."

Prominent critic of the rates hike, Donald MacLeod, managing director of HoldFast Entertainment which owns the Garage and Cathouse venues in Glasgow, said: "You really couldn’t make this up yet it seems that is exactly what is happening. To now hear that it is not actually a 12.5 per cent being offered but a 14.75 per cent cap and that to qualify for that we have to stump up first before we can lodge an appeal is absolutely ridiculous and not, in my view keeping the spirit of the agreement.

"To also hear that no instructions on collection and conditions of appeal have as yet been given to our local authorities, almost eight weeks after the announcement is truly shocking.

A Scottish Government spokesman said: “While it is for councils to administer the rates relief scheme, we anticipate that businesses will be able to apply for the relief and have this applied to their bills before they have to pay any portion of their business rates. Any business that is concerned about its valuation should contact the local assessor and discuss how they worked out the value and have until September to appeal.

“The business rates cap announced for hotels, pubs, restaurants and other accommodation must be an application based scheme to comply with European Union State Aid rules and to ensure eligibility for the relief, which is for councils to administer.”