The Government's scrapping of rates relief on empty properties has been blamed for the ditching of a £4.7 million development in Staffordshire.
Evans Easyspace has postponed a new office site which could create up to 300 jobs at the Kingswood Lakeside Business Park in Cannock.
The 22,500 sq ft building, which was due to be completed by 2009, would have created up to 64 offices.
But along with a £1.3 million site at Speke in Liverpool it has fallen casualty to the changes to business tax allowances which included the abolition of empty property relief from next year.
At present, unlet workshops are exempt from business rates and tax only becomes payable on office and retail space after three months and then at only half the normal rate.
But from April, full business rates will be due on empty shops and offices, and on industrial properties after six months. The law was introduced as a means of encouraging landlords to maintain full occupancy in their properties.
Evans said the inflexibility of the legislation would penalise companies who provide flexible start-up accommodation for the UK's small and medium sized enterprises.
It said: "For Evans Easyspace the changes will add approximately £500,000 to its 2008 budget forecast.
"As a result of this additional cost two Evans Easyspace developments, worth over £6 million, planned for Cannock and also Speke, Merseyside have had to be postponed which will have an adverse effect on the local business communities where a further 400 jobs would have been created."
Tom Stokes, managing director Evans Easyspace, said: "As a business clearly we do not choose to have empty units, but it does happen in almost all our 50 Evans Business Centres in the UK.
"At any one time only a limited number of small businesses will require space in a specific location so, once construction of a centre is complete, it can take up to two years to reach maximum occupancy resulting in two years of empty space.
"Why should we be penalised for offering space on the terms small businesses want and which allows them to grow and prosper?
"By encouraging local business development, we always maintain a vacancy rate of approximately 10 per cent which the Government now wants to charge us for."
Mr Stokes said the areas likely to be most affected by these changes would be deprived areas which those that most need the seeds of new business and entrepreneurialism - our most deprived areas.
He said: "These are the areas where buildings may take some time before they are fully occupied.
"With these changes, companies that would consider developing in these areas are now strongly disincentivised to do so."
Mr Stokes said the tax increase would have a significant impact on the company's growth.
The firm, which has 50 Evans Business Centres across the UK, said it was still going ahead with its plans to create 300,000 sq ft of flexible workspace, but the figure was down from the 400,000 sq ft originally planned.
Richard Smith, joint managing director of Midland developers Opus Land, said his company and other developers had also been disincentivised as a result of the new legislation.
He said: "There are many schemes we have not bid on because of this. This is another example of the Government not thinking. It is a stupid extra tax and they should lose this legislation like they lost the Inland Revenue CDs."