The increase in VAT to 20 per cent and the reductions in public spending announced by the government could mean the loss of as many as 1.6 million jobs, the Chartered Institute of Personnel and Development (CIPD) has claimed.

There has been a decline in the numbers of agreements made between HM Revenue and Customs (HMRC) and firms under the Business Payment Support Service scheme.

There are now only two months remaining before the standard rate of VAT climbs from 17.5 per cent to 20 per cent, and VAT-registered businesses are being urged to ready themselves for the change.

Like most other government departments, HM Revenue and Customs (HMRC) is to lose a part of its budget as a result of the spending review.

The cost to business of the increase in VAT to 17.5 per cent in January was as high as the earlier drop to 15 per cent, a new survey has found.

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