Increasing the burden of business is a theme I keep revisiting, and this week is no exception

This time, it is the Government's latest proposed changes to the VAT rules which will significantly increase the amount of calculation businesses must carry out, without resulting in a corresponding increase in Government revenue.

The proposed changes are all about the treatment of groups for VAT. Currently, companies under the same control can choose to be assessed as a group. This has the advantage of having to account for external transactions only, resulting in substantially less paperwork and a simplification in the calculation and payment of tax.

The proposal is to end this, requiring all companies to account for external transactions and all transactions between sister companies unless they never make VAT-exempt supplies. Those likely to be worst affected are businesses involved with insurance, education, financial services and some property dealings.

Under the new rule, groups with numerous companies will also have to check each business' transactions for compliance purposes. A company charging another in the group for its services will be liable for tax.

Already, many companies are looking to reorganise in order to minimise their tax liability.

Surely, all this is madness. The amount of extra revenue which will be collected is minimal, especially when one considers the extra cost of Customs policing the system, plus the fact many companies will simply negate the changes through reorganisation.

If these changes will affect your business, then I would suggest you consult your advisers.

This will allow you to calculate the cost of the changes and then give you time to inform Customs. The deadline for responding to the consultation paper is September 30.

Paul Byrne is regional managing partner at Baker Tilly based in Bradford

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.