The last-minute reduction in business rates will result in a redtape “nightmare” for firms, with some not even bothering to apply as a result.

Chancellor Alistair Darling made an 11th hour decision to cut the planned 5% increase to 2%, with the remaining 3% spread over the next two years.

However, as the original bills had already gone out, it has since emerged that businesses will have to pay the full amount now and apply retrospectively for the discount in July.

The result is more administrative work for both business owners and local authorities, which collect rates on behalf of the Government.

Ken Stevens, of the Sussex branch of the Federation of Small Businesses, said the situation “beggars belief”.

He added: “They never seem to get it right. What seem to happen is that the civil service is under pressure from the politicians to rush these things out.

“So they say to themselves, let’s get it out and find out what the problems are when everyone starts shouting.”

Simon Forrest, director of Oakley Commercial estate agents, believes that if the owners of millions of rateable properties apply for the discount at the same time, it will be an “administrative nightmare”.

Some businesses may even be put off by the red tape, he added.

Mr Forrest said: “They are giving with one hand but they are making it so hard to accept the offer that a lot of people will not take it up.

“I don’t think take-up will be close to 100%.”

Kevin Hoctor, senior policy adviser at the British Chamber of Commerce, criticised the Government for not announcing the discount sooner and said even the 2% rise could be too much for businesses.

He said: “At least the Government did move but they could have moved a whole lot earlier and made it a whole lot easier.

“The 2% increase has come at the worst possible time in terms of cash flow. It hits the bottom line as many businesses are struggling.”

Robert Oram, managing director of Hove Car Spares, based in Wellington Road, Portslade, said: “Getting anything back from the Government will probably be a nightmare.”

Mr Oram, who employs three fulltime and two part-time staff, is due to pay about £34,000 in rates this year.

He was unhappy with the lack of information from the Government about the discount.

Mr Oram said: “I only heard about this because we have a few here who read the newspapers. If they had not passed on the news, I would never have known. Because we sell secondhand car parts, we are one of the few businesses doing quite well.

“But I spoke to my customers who are only just hanging on.

A 5% rise would have pushed them over the edge.

“If we experience a downturn we could struggle even with a 2% rise.”

A spokesman for Brighton and Hove City Council, which is in charge of collecting rates in the city, admitted the change will be a burden but said the authority has been assured any extra costs will not come from its budget.

The spokesman added: “It is more work for us but if the eventual outcome is good for our customers then it’s worth it.

“There is a clear statement from the Government that extra costs to the authority will be met. We are in the process of working these out – the costs of things like administration and a software upgrade. It does appear that we will avoid the costly and risky process of having to re-bill everyone.”