Alistair Darling's carrot of £100,000 tax relief on the capital gains tax (CGT) paid by business owners who sell up has been slammed by a leading firm of accountants.

PKF said the proposal was "a knee-jerk reaction to the latest media criticism that will do little to reduce the damage that his proposed CGT changes will wreak on the UK's entrepreneurial culture."

Neil Whyte, tax partner at PKF, said the Chancellor seemed to be fiddling with tax policies for purely political reasons. He said: "That's a recipe for economic chaos which will frighten entrepreneurs away from the UK."

The Treasury last Wednesday indicated that the tax relief was going to be introduced - in what has been described as a clear bid to neuter the near- unanimous fury among business organisations about Darling's planned introduction of a flat rate of CGT.

The Chancellor is showing no eagerness to withdraw his original, much derided plan, announced in the pre-Budget report, to abolish taper relief from next April. Accountants are already reporting that the announcement has led to a surge in inquiries from business owners eager to sell before the new regime kicks in.

"The latest announcement simply illustrates short-term on the hoof' setting of tax policy, rather than considered policy designed to achieve clear economic objectives," said Whyte. "£100,000 may sound like a lot but in terms of retiring from a business, it's nothing. By taking steps to address the relatively minor issue of the taxation of private equity profits - essentially a political move - the Chancellor has angered the business community and hit entrepreneurship."

Whyte claimed the Chancellor would have been better advised to extend the rules around the Enterprise Investment Scheme, to allow owner-managers to invest in their businesses free of CGT.

He said: "That relief on investment of only up to £7m is currently only open to investors with no involvement in the running of the business."

Whyte said he is particu-larly incensed that the government is using tax policy to neuter political criticism. He added: "Real economic issues need to be addressed by long-term planning and policies where all the implications are carefully looked at.

"Having had a decade of prudence, the business community is rightly becoming nervous about the stream of announcements coming out of the Treasury.

"The question is whether the economy is being managed for the benefit of the country or the government."

However, the Chambers of Commerce were more welcoming of Darling's relief proposal. "It goes some way to meeting our concerns in that it will help those business owners that are seeking to retire," said David Frost, director- general of the British Chambers of Commerce.

"However, there is a wider concern in that the serial entrepreneurs, those that build businesses, will still be hit by the proposals to have a higher single rate of 18%."

PKF, which has Scottish offices in Edinburgh, Coatbridge and Glasgow, grew its Scottish revenues from about £6.4m in the year to March 2006 to £7.3m in the year to March 2007.