SMALL businesses in the south are vulnerable to phone call stealth charges, it emerged today.

UK phone companies are hiding the real cost of calls by imposing millions of pounds worth of unforeseen charges - using practices that could soon be declared illegal in France.

Phone companies are using hidden Tariff Inflation Factors - TIFs - such as secretly rounding up per second billing to per minute charging to inflate bills, warns south coast-based strategic purchaser CommerceCall.

Managing director Andrew Holford said: "Ninety-six per cent of businesses that ask CommerceCall for advice find they are paying call rates considerably higher than are printed on their tariff sheet.

"We quickly found the reason was TIFs - increases are generally around 25-30 per cent."

Small firms operating from home and spending about £100 a month on calls were "particularly vulnerable" - one dental practice was found to be spending 27 per cent more than the tariff rate.

Mr Holford said: "The NHS is also losing money through rigid buying practices that prohibit local buyers from accessing cheaper wholesale (non-TIF) rates.

"What's even more galling is that the French have already started to ban TIFs and their telephony market was not de-regulated until 1996.

"Legislation already proposed in France will ban the expensive practice of charging for calls in time bundles, commonly six, 30 or 60 seconds.

"Many 'cheap' domestic phone services use this TIF and it simply makes the rates you pay bear no resemblance at all to the rate you are quoted in your phone tariff."

James Dirks, chairman of the Southampton branch of the Federation of Small Businesses, called for EU-wide harmonisation of regulations surrounding TIFs.

He said: "TIF charging is an insidious method of obtaining money from smaller businesses who do not have the resources to monitor costs as closely as they would wish, or don't have the bargaining power to force a change in terms and conditions.''