Northern Irish hauliers are among the small and medium-sized companies which may be affected by the unexpected withdrawal of £100 million sterling worth of tax breaks promised in the run-up to last year's referendum on the Belfast Agreement.

Hauliers, already facing a haemorrhaging of members reregistering in the Republic because of lower diesel and vehicle excise duties charges, are to lose the concessions, along with farming businesses.

The British government was forced into the embarrassing U-turn on the concessions, designed to shore up the peace process, when it emerged that some of the proposals do not comply with EU regulations. A number of local firms could now face large and unexpected tax bills.

The concessions were announced by the Chancellor of the Exchequer, Mr Gordon Brown, as part of a package of incentives for small and medium-sized businesses, which it was hoped, would also have a beneficial effect on the peace process. The Inland Revenue stated that while the scheme was still subject to approval from the EU, companies could apply for the tax break on a provisional basis.

It has now emerged that the EU is not happy about some aspects of the scheme because they amount to select aid for a region, and the government has been forced to restrict the type of investments which will qualify.

The problem for a number of firms in the transport and agriculture sectors is that they have already made substantial investments in the expectation that they would be eligible, but now face significant tax bills for which they had not budgeted.

The Freight Transport Association has said the withdrawal of the allowances could force even more hauliers to move to the Republic, after an estimated 3,000 trucks were reregistered south of the Border following changes in the last British budget, coupled with a strong sterling which created a gap in truckers' operating costs in the two jurisdictions.