Scottish Business UK (SBUK), which describes itself as an independent, non-party voice for business leaders who support the Union, accused Nicola Sturgeon and SNP ministers of “behaving like a South American banana republic”.
The group believes using public money on the case for independence may be beyond the legal power or authority of Scottish ministers. It follows the Supreme Court ruling the Scottish Parliament does not have the power to legislate for another vote.
However, some legal experts have poured cold water on such claims. Aileen McHarg, a professor of public law at Durham University, tweeted: “It only requires a moment's thought to know that it's a ludicrous position to adopt.”
SBUK has reportedly received initial advice indicating the case is arguable, but the details will need to be examined further.
Robert Kilgour, chairman of SBUK, told the Daily Mail: “Nicola Sturgeon is using public taxpayers' money and civil servants for party purposes. We're seeking legal advice on the options in front of us. Enough is enough.
“I waited to see what her and the SNP response is and it seems to be ‘full steam ahead’ on spending public money and using civil servants on what is, from the Supreme Court ruling, quite clearly party campaigning activity, not something that is within their remit as an elected government to do.
“It is absolutely scandalous that they are doing this. It is arrogance beyond belief and is a complete insult to Scottish taxpayers.”
Mr Kilgour added: “They are treating Scottish taxpayers' funds like their own piggy bank and they are behaving like a South American banana republic.”
Following the Supreme Court ruling, Ms Sturgeon faced calls to reallocate the £20 million earmarked for a second independence referendum next year.
The Scottish Conservatives have now written to the Government’s Permanent Secretary, John-Paul Marks, to ask him to seek “ministerial direction” over the lawfulness of any continued expenditure on referendum planning.
Donald Cameron MSP said: “In light of the Supreme Court ruling last week, I struggle to see any legal justification for ministers to continue to lavish £20million on planning for a referendum that they don’t have the authority to hold.
“That’s why I have written to the Permanent Secretary for clarification. I believe he has a legal duty to seek ‘ministerial direction’ on this because it looks as if the Scottish Government is allocating public money to something beyond its legislative competence.
“Nicola Sturgeon said her next step, after the Supreme Court’s judgment, was to try to turn the next General Election into a ‘de facto referendum’. But that’s SNP strategy as a party – not a Scottish Government policy.”
A spokesman for the First Minister previously said: “Obviously [the £20m] was in the Budget not for this financial year, but for next financial year. [Deputy First Minister] John Swinney will take forward the Budget process for next year across all portfolios and update Parliament in the middle of next month.”
Around two dozen civil servants are working on Ms Sturgeon’s updated prospectus for independence. Three papers have already been published.
A Scottish Government spokesman highlighted the majority support in the Scottish Parliament for a referendum, adding that it “will continue to set out, through the Building a New Scotland prospectus series, what could be done with the full powers of independence”.