Businesses are waiting up to 3 months for their VAT registration to be processed due to HM Revenue & Customs’ more thorough checking system designed to combat VAT fraud.

However, the new checks are "clobbering 99pc of honest businesses" according to the Institute of Chartered Accountants of England and Wales (ICAEW), and even the government have called it “unacceptable”.

Small businesses often have difficulty in organising cash flow when first starting up, or undergoing new periods of growth, and these delays can have a massive impact.

"If you can't invoice your customer with an appropriate VAT number they will not accept it as it upsets their own systems. It also handicaps exports, which require VAT numbers," stated Mark Prisk, in a letter to Small Business Minister Stephen Timms.

Mr Prisk the shadow enterprise, competition and deregulation minister is calling for the government to take action to cut this delay.