A further £6m could be lost to the Scottish purse as a result of the VAT implications of public sector reform.

The latest public body to face losing VAT cash is Scottish Enterprise, with the planned restructuring of local enterprise companies set to see at least £6m lost to coffers in London.

Reform of the enterprise network has been at the heart of the Scottish Government's efficiency drive, so the fact that millions of pounds freed up in this way will go straight to the Treasury is a blow to John Swinney's plans. The old LECs were VAT-exempt but when they are wound up and Scottish Enterprise takes over a streamlined network a major part of these efficiency savings could be swallowed up by the Treasury.

The Herald revealed this week that the setting up of the Scottish Police Services Authority went ahead without securing an agreement that it would be VAT-exempt, which could result in a bill for £5m.

The government insisted yesterday that the Scottish Enterprise situation was not a blunder but a calculated decision that reform was worth pursuing, even without a deal from Her Majesty's Revenue and Customs on VAT status, and that these negotiations continued.

A Scottish Government spokeswoman said: "Ministers were fully aware of Scottish Enterprise's ability to recover VAT in respect of Local Enterprise Company transactions and that their ability to do so was subject to continuing review by HMRC.

"The total amount of VAT currently recovered in this way is around £6m per annum and declining. However, savings arising from the reform of Scottish Enterprise will comfortably exceed any VAT losses arising from the removal of LEC structures."

The Herald was informed that the implications of scrapping local enterprise companies could be a loss of VAT-exemption of up to £15m annually, but sources at Scottish Enterprise indicated that the actual figure was closer to £6m.

A spokeswoman for SE said yesterday: "We continue working towards ambitious efficiency targets, the benefits of which will outweigh any VAT implications.

"VAT recovery by LECs diminished over the years and, as arrangements were subject to ongoing reviews by HMRC, could have been withdrawn regardless. Going forward, there will be no loss to the public purse as VAT recovery already comes from a public source - the impact for the taxpayer is neutral."

Alex Neil of the SNP said: "It's quite clear that Scottish Enterprise is responsible for this blunder. There needs to be an investigation into why they received this information from auditors and didn't disclose it to ministers."