Hundreds of Edinburgh firms have lodged claims worth more than £5 million, which could see them receive a 20% discount on their business rates or an equivalent package.

Now The Herald has learned the official residence of the First Minister has attempted to get in on the act.

Government officials have been embroiled in a similar row over the £50,300 annual rates bill for Alex Salmond's city centre residence, Bute House.

The Scottish Government has recently attempted to appeal against its own levy for the impressive Georgian townhouse at No 6 Charlotte Square in the New Town.

Documents revealed the officials lodged a challenge against the Lothian Regional Assessor over the rates bill it had been sent.

The charge is a tax administered by local authorities on behalf of the Government.

But the Government has suddenly dropped the action, just as a separate test case involving two shopping centres that found against such appeals was drawing to a close.

The costs of the action to the taxpayer are not yet known.

Opponents of the Scottish business rates system claim it is unfair and lacks transparency.

News of the Bute House appeal caused consternation among business leaders and politicians, with Edinburgh Central Labour MSP Sarah Boyack pointing out "the irony won't be missed by Scots".

The move came as business leaders who lost the first in a series of expected court fights this week claimed inflated levels they paid would mean prices would go up at the tills and some firms would be forced to close.

The SNP administration was among hundreds that appealed against the assessor – who sets the levy based on Government policy – and the hearing was due to be heard by the appeals committee in Edinburgh on October 11.

Others appealing were listed as shops or offices, and Bute House was said to be an "official residence".

The Scottish Government is preparing a review of the scheme after widespread concerns from businesses that it was heaping hundreds of millions of pounds more of a burden on budgets.

Many claim their rates are unfair as they have had a change to their material circumstances, for example changes in the value of buildings due to the economic downturn – the argument that failed in court this week – and the tramworks.

The latter argument is still to be tested.

The challenge over Mr Salmond's residence would have been heard before the Lothian Valuation Appeal Committee. The Scottish Government said the appeal was withdrawn because there was no evidence of any change to material circumstances at Bute House.

It is believed the ruling at the Land Tribunal Court on Thursday that found firms could not use the economic downturn to claim change of material circumstances will have scuppered hundreds of claims by shops and other firms around Scotland, including in the streets surrounding Charlotte Square.

Ms Boyack said: "The SNP are pushing through a massive increase in non-domestic rates over the next three years, which will put further pressure on hard-pressed businesses. Whilst the SNP go out to consult on the impact of rates, they were trying to avoid paying for the First Minister's official residence by appealing against a demand for payment.

"You couldn't make it up. The irony won't be missed by Scots."

Colin Borland, of the Federation of Small Businesses in Scotland, criticised the use of public money to prepare such cases, saying "people will be concerned with the efficiency".

The Lands Valuation Court in Edinburgh ruled against firms that said rates on their buildings were too high because they were set before the credit crunch.

The appeal by the Mercat Shopping Centre in Kirkcaldy, Fife, and the Overgate Shopping Centre in Dundee has set a precedent that will affect many other cases.

A Government spokesman said: "It is standard procedure when dealing with clients who have substantial property portfolios for the agent to put in a block appeal for the entire portfolio.

"A substantial number of properties are subsequently withdrawn, prior to the appeal proceeding, as there is no evidence of any material change.

"This was the case with Bute House and there are currently no appeals to be considered."