British Gas has come under fire from retailers and the energy regulator for its treatment of small business customers.

Last month the supplier, which announced profits of £270m for the first half of the year, was fined £2.5m for “basic failures” in its small business customer service. Regulator Ofgem said the supplier had not put in place proper complaints procedures for its small business customers.

The fine came in the same month that Today’s Local retailer Philip Bennett from Beeston, West Yorkshire, was hit with a bill for almost £40,000 after British Gas discovered it had been incorrectly billing him for the past three years.

Philip, who had maintained regular contact with the supplier to ensure he was paying the correct amount, said he “nearly dropped dead” on receiving it. “As far as I knew I was in credit. If they force me to pay this, the business will be bankrupt and my staff will be out of jobs.”

British Gas said it was working with Philip to resolve the issue. It has also acknowledged that its micro-business customer service fell short of expectations.

Last January micro-businesses those with less than 10 full-time staff and annual turnover of less than £1.8m were given the same protection as domestic customers.

Association of Convenience Stores (ACS) chief executive James Lowman described British Gas’ fine as a “breakthrough”. “It demonstrates the need for more than the very smallest businesses to be offered protection,” he said.

ACS has been campaigning for tougher regulation of contracts between suppliers and small businesses.

Ofgem is also investigating Npower and EDF Energy over customer complaints procedures.