A leading business organisation has backed a call for the full introduction of a new controversial tax system to be put on hold.

The Federation of Small Businesses (FSB) has welcomed the Treasury Select Committee's recommendation to the Administrative Burdens Advisory Board (ABAA) that in order to assess the full impact of mandatory quarterly tax reporting, a pilot scheme is carried out before it is introduced more widely.

It follows survey carried out on behalf of the FSB that found the average cost of the new quarterly tax reporting system, part of Making Tax Digital, would be £2,770 per business.

FSB national chairman Mike Cherry said: "We are delighted to see the Treasury Committee embrace our recommendation for a full pilot of mandatory quarterly tax reporting before Making Tax Digital is launched.

"Comprehensive testing of the programme is critical to minimising the disruption it will cause to small firms at a time when the costs of doing business are at their highest since the beginning of 2014."

"Research commissioned by FSB indicates that HMRC has significantly underestimated the true cost to small businesses of quarterly tax reporting.

"We therefore fully support the ABAB review and look forward to working with the body to further scrutinise HMRC's implementation of Making Tax Digital.

"We are also very pleased to see that HMRC has now published an updated impact assessment which we will carefully assess. However, this should have been available much earlier.

"Unlike the figures posited by HMRC, FSB's calculations were conducted externally to ensure they are independent, objective and robust.

"The onus is now on HMRC to explain why their assumptions remain so out of sync with those of leading business and accountancy groups."

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