By Tom Barton And Andrew Forgrave

10 Aug, 2002

Page 9

TOURIST businesses that received compensation for losses during the foot -andmouth crisis are now being hit with tax bills, it emerged yesterday.

One North Wales hotelier last night questioned whether she should have worked an 85hour week during the crisis, just to receive her highest ever tax bill.

Barbara Baldon said she faced a 29pc tax bill on crisis support from the Welsh Assembly, after suffering her lowest turnover in 15 years.

'I'm wondering what our reward was for keeping going during the crisis,' she said.

'It would have been much easier for us to have closed down for seven months during foot-andmouth, at great cost to the government in terms of paying income support and other benefits.'

A total of 700 crisis-struck firms in Anglesey and Conwy, and a further 500 in Gwynedd, were last year awarded payments from the Assembly's pounds 65m Rural Recovery Fund, set up to cushion the effects of foot-and-mouth.

But the grants were intended as a replacement for lost income, and hence subject to tax - and it is this that Ms Baldon claims has hiked up her bill.

Ms Baldon, 44, of The Lodge, Talybont, near Conwy, says she was not willing to abandon her 20 employees, and took on a second job so that she could balance the books.

Now, having received this money - which she believed was for investment and hence tax-free - she has an enormous tax bill.

'In 15 years in the business, last year was our most disastrous year ever, and yet our tax bill was the biggest we have ever received' she said.

Sue Evans, North Wales rural surveyor for the Country Land and Business Association, added: 'It seems ridiculous that the Government can give with one hand and take away with another.

'There is a suspicion the Government has made inflated claims about the help it was giving rural businesses when all it has been doing is clawing that money back through taxation.'

Now Welsh Tories are lobbying the National Assembly to press the Westminster government to exempt foot-and-mouth payments from tax.

Conwy Conservative spokesman Guto Bebb said the typical sole trader or partnership paying tax and national insurance, 29pc of the compensation would be returned to government.

He said: 'One of the few positives from last year's disaster was the way the Assembly responded to the plight of rural businesses where losses could be shown to have occurred.

'To see these payments now being subjected to tax and national insurance is simply absurd.'

Most businesses had received compensation well below the actual losses sustained, he said.

Mr Bebb called on Andrew Davies, Assembly Economic Development Minister, to make a case to Westminster for special tax treatment for crisis payments.