THE latest Government initiative to turn muck into brass is creating a stink among people in the North-East horse world.

The industry says it is about to be hit by a new stealth tax in the form of licensing fees - for manure heaps.

Rules to be introduced in July mean equestrian businesses that compost manure to be used as fertiliser will have to pay up to £500 a year.

Riding school owner Margaret Hallums, who runs the Jodhpurs Riding School at Tockwith, near York, which has 30 horses, said last night: "Who thinks of these things? We are struggling as it is and this is another blow."

However, manure from privately kept horses is classed as household waste and will be exempt.

But manure from businesses is classified as industrial waste and the average horse produces about nine tonnes of manure a year.

The Department for Environment, Food and Rural Affairs (Defra) says it is introducing the rule to regulate the business and ensure it is done safely and does not pollute water courses.

But the Forum of Private Business has labelled it as stealth tax which will hit smaller businesses the hardest. Its head of research, Andrew Mowlah, said: "For small yards, composting is a viable and much-used alternative. Our members are telling us that this new tax is absurd and has come completely out of the blue."

The Association of British Riding Schools accused Defra of incompetence and said the horse industry had not been asked during the consultation period.

Chairman Duncan Brown said: "Frankly, this is causing a bit of a stink. It is a total mess and at first sight it was very alarming, although it is nowhere near as onerous as was first suggested.

"It will hit very few, but those it does hit will be hit very hard."

Many stables, such as those at Middleham, North Yorkshire, have their manure taken away and will not be affected by the new charges.

Ms Hallums said: "Hundreds of riding schools are going out of business every year. The red tape is absolutely unbelievable and this just makes it worse. We will just have to look for different options for the manure."

The rules will apply only to those businesses composting manure on a larger scale and heaps of less than five tonnes will not incur a charge.

However, amounts between five and 50 tonnes will cost £252 for the first year and £174 for the next, 50 to 100 tonnes will cost £482 for the first year and £402 thereafter.