Brexiteers’ favoured customs option would cost even more than £20bn, HMRC boss tells MPs

A 'no deal Brexit' would impose the same bill - because of need for customs declarations

The customs plan favoured by pro-Brexit ministers is likely to cost businesses even more than the £20bn forecast and would fail to avoid a hard border in Ireland, MPs have been told.

Revenue and Customs said its enormous estimated bill for the technology-based “max fac” proposal did not include the “costs of delays” at the UK’s borders.

The organisation also said its prediction had been “validated” across Whitehall, rather than challenged by any ministers – despite Theresa May’s spokesman dismissing it as “speculation”.

And it warned it would not remove the need for border checks in Ireland without other measures, despite the prime minister’s pledge to prevent a hard border.

Jon Thomson, HMRC’s chief executive, also pointed out a “no deal Brexit” would incur the same £20bn-plus bill, because – like “maximum facilitation” – it would require customs declarations.

The huge cost of the untested technology – double the UK’s annual payments to the EU – triggered a huge row when revealed two weeks ago, with accusations that ministers had been kept in the dark and that the calculation was faulty.

But Mr Thomson told the Treasury select committee: “The estimate we have given has been in ministerial papers.”

And James Harra, his deputy, said its figures had been “shared across Whitehall”, adding: “They went through an internal validation process and challenge process within Whitehall before we firmed up on them.

“I’m not aware that, in the last two weeks, there has been any challenge to that.”

HMRC says firms would be forced to make customs declarations at £32.50 a time, with similar charges at EU borders and rule-of-origin protections for some products imposing further charges.

However, in new written evidence to the committee, Mr Thomson said his calculations excluded “the risk of delays at RoRo [roll-on/roll-off] ports” if max fac failed to deliver its promised technological solutions.

Mr Harra also warned the proposal “would not in itself remove the need for a hard border in Ireland”, without exemptions for local businesses, for example.

Jo Swinson, a Liberal Democrat MP and supporter of the pro-EU Open Britain campaign, said the evidence strengthened the case for “staying in both the customs union and Europe’s economic area”.

“Ten days ago, HMRC told MPs that max fac would cost British businesses £20bn a year and today they have revealed that max fac means a hard border in Ireland,” she said.

“If the government are serious about avoiding a hard border on the island of Ireland, they must now admit that max fac is a dead letter.”

Earlier, John Keefe, director of public affairs at Getlink – which runs the Channel Tunnel – warned household bills would rise, explaining: “The consumer will bear the costs at the end of the day.”

Businesses could “absorb” some of the cost, but he added: “If the impact is across the whole of the supply chain and the whole of the economy then, inevitably at some point, that gets passed down to the consumer.”

Brexiteers are pushing the max fac option, rejecting Theresa May’s preferred “customs partnership” – which would see the UK collect EU tariffs – as keeping the UK under Brussels’ wing.