The Big Question - FDs prefer VAT grouping to stay intact for simplicity's sake.

Nearly 40% of finance directors want the VAT grouping system to remain as it is.

This week’s Big Question survey, carried out by Accountancy Age and Reed Accountancy Personnel, found that 37% of the 200 FDs questioned opposed any reform of the VAT grouping system by Customs & Excise. Grouping allows a UK business group to have a single VAT registration.

Malcolm Davis, FD of Lovell Construction, said: ‘Changes to the system will increase administration costs. I don’t understand the logic in changing a tried and tested system.’

Chris Denby, of British Arab Commercial Bank, added: ‘Reorganising our corporate structures for new VAT rules would probably be considerably more expensive, and might be at odds with our business requirements.’

Philip Walbank, KLM treasurer, also stressed the need for clarity. ‘It is difficult to sympathise with banks paying a bit more tax, bearing in mind their profit levels,’ he said.

Only 16% of FDs favoured a VAT shake-up. ‘VAT is becoming overly complex and expensive to administer. Purchase tax was dropped for this reason,’ said Sean Myles, of Gwent Training and Enterprise Council.