The customs plan preferred by pro-Brexit Cabinet ministers could cost businesses up to £20bn a year, the HMRC chief executive has said.
Jon Thompson said the so-called ‘maximum facilitation’ proposal – which utilizes technology not yet in existence – could take three years to set up and cost firms more than £350m per week.
The figure would dwarf the UK contribution to Brussels in 2016 of £13bn.
He also said that the prime minister’s preferred ‘customs partnership’ option – which would see the UK collecting tariffs for Brussels – could be cost neutral for firms but take five years to set up.
Giving evidence to MPs on the Treasury Select Committee, he said businesses would be hit in the pocket mainly by the need to fill out customs declaration forms.
Thomson said that could amount to about £13bn when the forms required on both sides of the border are taken into account.
And he said further costs around so-called rules of origin requirements could run to “several billions of pounds more”.
“You need to think about the highly streamlined customs arrangement costing businesses somewhere in the late teens of billions to operate," he said.
“So somewhere between £17bn to £20bn. It is that sort of order. The primary driver here is the customs declarations.”
Thompson meanwhile said the customs partnership option, described by foreign secretary Boris Johnson as “crazy”, could cost £700m to set up.
He noted that the system could arguably be cost-neutral for businesses once running – but could cost them up to £3.4bn a year.
The proposal would see the UK collecting tariffs on imports at the EU rate then reimbursing firms if the goods are sold only in the UK and at lower tariffs.
Nicky Morgan, Treasury Committee chair, asked Thomspon whether it would be a relief if parliament voted for a customs union over the max-fac arrangements. He responded that it was for MPs to decide.
A spokesman for the prime minister said the suggestion the maximum facilitation option could cost firms £20bn was “speculation”.
"The prime minister has asked for work to be done on both customs models. That work is ongoing and therefore any speculation about implementation is just that," they said.
Labour MP Jo Stevens, speaking on behalf of anti-Brexit group Best for Britain, said the maximum facilitation option could “blow up” the economy.
"This shocking evidence from the chief taxman today shows that Brexiteers don’t care about the carnage it will cause to the economy," she said.
"This will hurt businesses up and down the country and threaten jobs."
Labour backbencher and campaigner for a second Brexit referendum Stephen Doughty said the government was "pursuing a path they know will make the whole country poorer".
He said: “With the costs of Brexit mounting up, it is clearer than ever that we need a People’s Vote on the final Brexit deal.”