A filling station owner in the Yorkshire Dales is furious after his site is one of two that have had the rural fuel tax rebate scheme withdrawn. Blundering tax officials claim it was granted in error.

HM Revenue & Customs has written to Aysgarth Garage and Woodhall Service Station telling them that they should not have been accepted onto the scheme, which provides a 5ppl subsidy for fuel stations in three remote rural areas in England and 14 in Scotland.

Hawes was one of the places in England which qualified for the scheme, and the two garages, which have the Hawes postcode although they are some miles from the town, applied to be included. Their applications were approved in April and they have been operating the scheme since it was launched, but HMRC has now decided that only a single site, which is in the town, actually qualifies.

Mark Oyston, who owns Aysgarth Garage, said it was a long drawn-out process to apply and it was 6-8 weeks before they were told they met the criteria.

He said since it had been introduced sales had increased and he had invested in a refurbishment for his Gulf service station, expanding the shop and taking on an additional member of staff.

Now he has the problem of explaining to his customers why his prices will be going up again and he says he will be facing unfair competition from the one site in the area that still has the rebate.

He said: “We provide a vital service around here. We open longer than any of the other garages, 7am to 7pm seven days a week, and we supply the ambulance service, the police and the national park authority. The government should be supporting rural businesses like us.

“I just hope the customers understand and we don’t lose business, but the garage in Hawes will be cheaper than us.”

In its letter HRMC apologised for the “error” and said the registration in the scheme would cease on October 24.

It added: “I would like to reassure you that we will not seek to reclaim any payment you have received from this scheme.”