A LEADING business pressure group is warning that the horse industry is to be hit with a new stealth tax - on horse muck.

Under legislation to be enforced this July by the Department for Environment, Food and Rural Affairs, equestrian businesses - from livery yards to studs and riding schools - which compost muck to use as fertiliser will have to obtain a permit costing up to £500.

The warning about the new costs comes from the Forum of Private Business who say that as a result small businesses face a double whammy because to compost the waste operators will need to have installed leak-proof concrete flooring beneath the muck heaps with a sealed holding tank for the liquid which runs off - all at a cost which could run into thousands of pounds.

Manure from privately kept horses is classed as household waste and will be exempt. But manure from businesses is classified as industrial waste, so the way it is kept, treated and disposed of is currently subject to the Waste Management and Licensing Regulations (1994). One of the stipulations of these regulations is that muck must be taken away by a licensed remover, unless it is composted on site for use as a fertiliser. A muck heap of less than five tonnes will not incur a charge, but one of between five and 50 tonnes will cost £252 for the first year and £174 thereafter, while 50-400 tonnes will cost £482 for the first year and £402 each year after that. The average horse produces nine tonnes of manure a year. The FPB's head of research Andrew Mowlah said the legislation would hit smaller businesses hardest: "Yet again it appears the government has failed to conduct a proper regulatory impact assessment and therefore small firms are going to be clobbered by this legislation," he said.

"For small yards composting is a viable and much-used alternative. Our members are telling us that this new tax is absurd and has come completely out of the blue. Manure has been spread for as long as land has been farmed, it is ludicrous now to suddenly slap a stealth tax on the industry."

The bad news warning comes in the same week as farmers received a boost from the government's new Environmental Stewardship Scheme (ESS). The ESS scheme will reward farmers for undertaking environmental protection and enhancement work, and is designed to build on the Countryside Stewardship Scheme and the Environmentally Sensitive Areas Scheme.

Michaela Johns, spokesperson for the Southern Counties Association of the Chartered Certified Accountants said: "This move will be some recompense for those farmers currently standing to lose money under Common Agricultural Policy (CAP) reforms mainly the Single Payment Scheme, which will reward on amount of land owned rather than level of production."