Victor Buchanan, who owns The White Swan in Pickering's Market Place , was stopped by officers in his car park on Friday evening after they had seen him make a food delivery.
They conducted a check on his insurance policy and had a tow truck at the scene.
Mr Buchanan says that he has had business insurance for 20 years, and renewed his cover in January with a new provider. After contacting his insurers, he found out there had been a mistake in the paperwork which invalidated his policy.
After presenting a cover note as evidence to the police, they agreed not to impound the car but proceeded to issue notice of a £300 fine and six penalty points for driving without insurance.
The 54-year-old businessman believes that the officers were 'lying in wait' for him despite the voluntary services he has performed for the community since lockdown forced the pub to close.
His staff now make and deliver 50 Sunday lunches and 40 portions of fish and chips per week, with donations from customers going towards free meals at The White Swan for nominated key worker heroes when the business re-opens.
They have also delivered 1,500 meals to hospitals in Scarborough and York, and have provided free soup, curry and coffee to NHS staff and volunteers working to vaccinate people at local surgeries in Pickering.
"I explained why I was doing deliveries to the officer, thinking that he would just advise me to sort it out as soon as possible. I was dumbfounded when I found out the intention was to impound my car. What makes it worse is during all this I appealed on the phone to their inspector but she was resolutely behind their actions. Clearly this was pre-planned," said Mr Buchanan.
"On January 18, I changed insurance and took it as read that my car was still covered for business activity - as it has been for 20 years. The underwriters have made a genuine mistake and my car wasn’t covered for ‘business’. For this I am really sorry. My business is closed for the duration and rather than sit at home my team think it better to support our community. I’m not the sort of person who cuts corners on this type of thing.
"I managed to get an insurance cover note issued and emailed to the police that night, just before the tow truck arrived. I believe this too was pre-organised as it was later seen parked up round the corner loading another car.
"My car wasn’t impounded but old ladies who were relying on us for their supper were disappointed as I was held up for 45 minutes.
"I’m disappointed by their treatment. Why are North Yorkshire Police not focusing on more important matters? Is the public interest really being served?"
Mr Buchanan wants his experience to be a warning to other drivers that they must notify their insurers if they are using their private car for voluntary work - and that their premium will not usually rise as a result.
After initially telling customers he had experienced 'transport issues', he revealed what had happened on the pub's Facebook page after complaints from people who had placed orders and felt let down as a result of the delay.
Mr Buchanan also pointed out that some of the 200 key workers nominated for his pub's free meals are police officers, and that he feels strongly that front-line staff deserve recognition. All profits from the meal deliveries go towards this scheme, with the business only making back the operating costs.
"They were geared up for this operation at some cost, it was not an ad-hoc stop. They were following the instructions of senior officers. There's a right way and a wrong way to go about it. I'm sure if they'd looked harder, they would have found several cars in Pickering without tax or MOT.
"I get the point they're trying to make, but I feel with the way they went about it they've lost perspective."
A North Yorkshire Police spokesman said: “As proceedings are active, we are unable to comment on this case for legal reasons and doing so could undermine the outcome.
“That said, anyone who feels they have been wrongly issued with a traffic offence report has the opportunity to contest it, and details of how to do this are provided as part of the process.”