Liberal Democrat George Lyon told the Press and Journal the penalty was being contemplated by European Commission officials who have already said Northern Ireland could be fined up to £111million for the same problem.

Rural Affairs Secretary Richard Lochhead criticised Mr Lyon for scaremongering on the size of the possible penalty. The minister did, however, acknowledge a fine could well be imposed after farmers in Scotland claimed subsidies on ineligible land such as water courses, ponds, roads or areas covered with scree, rocks, gorse, bracken, woods, hard standing, yards, houses and buildings.

Mr Lochhead added: “EU auditors are enforcing regulations designed to crack down on claims for ineligible land, but no decision has been taken on any fine. My officials have been discussing the auditors’ findings and their implications for some months and auditors have deferred consideration of any disallowance (fine) while they look at the further evidence we have provided.”

The Scottish Government, in September, warned farmers they faced losing up to four years of subsidies if any mistakes were found in the maps they used to claim single farm payments (SFP) and less-favoured area (LFA) support.

It prompted a flurry of activity among subsidy recipients, more than 2,000 of whom have since then notified the government of possible problems and corrected their maps. Notifying the likelihood of an error limits the penalty that can be applied on an individual business. Failing to notify an error is deemed a deliberate breach of rules and can result in subsidy payments for up to four years being forfeited.

Mr Lyon said the sudden clampdown on ineligible land claims in September was a “desperate attempt” by the Scottish Government to head off swingeing fines. He said England, Wales and Ireland had all excluded land covered by bracken and gorse from subsidy claims since 2006, which prompted questions as to why Holyrood had not similarly done so.

The MEP added: “It appears the Scottish Government only woke up to the fact it had made a massive mistake on the interpretation of eligible land when the auditors imposed a hefty fine on Northern Ireland. It is for this reason that it has been scrambling to try and get its house in order before the visit of the auditors this month.”

He asked why the government had not discussed the issue with other administrations in the British Isles. He too queried who would pay any penalty that is imposed and whether it would fall solely on government or be shared with farmers. The understanding is, however, the EC would deduct any penalty straight off the agricultural and rural development subsidies it pays to Scotland, which would mean every recipient potentially suffering.

Mr Lochhead rejected assertions the government had overlooked the issue of eligible land, saying it had spoken regularly to other administrations to make sure European rules were fairly implemented. He said Mr Lyon should instead be following his lead in asking the commission for a more proportionate subsidy penalty regime.

NFU Scotland chief executive James Withers said Europe’s subsidy rule book was lengthy and guidance often inconsistent and unclear. He too renewed calls for more proportionate penalties for any errors made.