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The failure to bring in a promised cash-back scheme for companies hit by EU tariffs is "deeply disappointing", a leading business body has said.

The plan to reimburse Northern Ireland firms was outlined in May 2020.

Three months into the new trading arrangements, the scheme still has not been introduced.

Some businesses have been forced to decide whether it is viable to continue selling to customers in the Republic of Ireland.

The cash-back scheme affects those trading goods between GB and NI at risk of being used in the Republic of Ireland or the EU internal market.

The Northern Ireland Protocol states the government would establish a reimbursement scheme for goods which attract an EU tariff but "can subsequently be shown to have remained in the UK customs territory".

The government has told ³ÉÈË¿ìÊÖ News NI it remains committed to such a process and further guidance will follow shortly.

But there are concerns it is causing cash-flow problems, with some companies considering shrinking their businesses or to cease trading with customers in the Republic.

The Federation of Small Businesses told ³ÉÈË¿ìÊÖ News NI: "It is deeply disappointing that nearly three months into the new trading arrangements there is still no duty rebate system in place."

It called on the EU and UK to "simplify the current arrangements" and to "recognise the vast majority of GB to NI trade is just for local consumption".

It added businesses should not be required "to endure vast amounts of bureaucracy simply to prove that [goods] are not at-risk of going south of the border".

Speaking at the Northern Ireland Affairs Select Committee on Wednesday, Andrew Lynas from Lynas Foodservice said there was a "frustration" that the system was not operating as it should.

"It isn't set up and the reality is it's probably not going to be set up until the summer," he said.

"So for businesses like myself we're going to have to pay out goods at risk and when are we going to get that money back?"