Plans to introduce new tax credits could leave many small businesses in Sussex unable to cope with the administrative burden.

The Government has been urged to reconsider a number of proposals in advance of the 2003 start date for the new tax regime and the potential pitfalls are highlighted in the IoD's latest account of mounting red tape on business.

Michael Evans, chairman of the IoD in Sussex, said: "Employers have reluctantly taken on the burden of delivering the working families tax credit through the payroll.

"In 2003, only three years after payroll delivery started, the system will change. Many of the changes are helpful to businesses but there is still a great deal of work to be done, because employers will be faced with the expense and disruption of some big systems changes.

"Childless employees will get tax credits for the first time, bringing many small employers into the system. They will face a steep learning curve. The more they can prepare for this, the better.

"Awards of new tax credits will run for 12 months, rather than six. This will reduce notifications to employers to start paying awards, but it will mean changes mid-year to keep abreast to employees' circumstances."