The parliamentary Public Accounts Committee has recommended streamlining tax registration for small business, cutting out layers of red tape.

The cross-party group said in its latest report that Revenue & Customs should introduce a single registration system and a unique reference number for PAYE, VAT and corporation tax.

PAC chairman Edward Leigh said: 'New businesses are frustrated by having to register separately with the Revenue for each and every tax they pay. This is because the department is hampered in having a separate computer system for each tax. It must push towards a system where a new business registers just once for all the taxes it must pay.'

Around 700,000 businesses start up each year and they must register with the Revenue for each tax as it becomes due. There are 1.2m registrations annually.

Bill Knox, tax chairman of the Federation of Small Businesses, welcomed the report, saying it 'rightly recommends that the tax authorities make it easier for new businesses to register for tax and provide advice to them on how to meet their obligations'.

He added: 'This will enable more businesses to grow and prevent them from innocently falling foul of the authorities because of the complexities of the system.'