Halson said the industry's failure to adopt the VAT Flat Rate Scheme introduced in 2002 is costing operators time they can ill afford. So far, only 4,302 caterers and hoteliers have made use of the scheme, yet nearly 33,700 hospitality businesses are eligible.

'Small businesses are run by very busy people. This scheme would not only save time and allow owners to get on with running their business, but it removes the worry connected with working out VAT', said Halson.

Accountant Alan Craddock, of Carter Backer Winter, agreed that many businesses would see significant reductions in paperwork, but urged caution. 'Whilst some businesses may see a reduction in their VAT, others may see an increase. A cost-benefit analysis would be required', said Craddock.

The VAT scheme allows companies with an annual turnover of up to £150,000 to calculate their VAT repayments as a percentage of their gross earnings, rather than by individual transactions.