A Brexit no deal would cost businesses around £20bn a year, HMRC boss Jon Thompson has claimed, as he doubled down on the estimates that max fac would do likewise.
Speaking to the Treasury Select Committee this morning, Thompson told MPs he was confident in his statements from a fortnight ago that suggested the max fac customs option – also known as highly streamlined – would be significantly more expensive to business than the new customs partnership, preferred by Theresa May and civil servants.
Thompson was grilled on his estimates, after economists at the Institute for Economic Affairs argued he was out by around £15bn, putting it closer to £5bn.
City A.M. sources have claimed that ministers were not briefed ahead of the Brexit war Cabinet, where the government had been expected to come to a final decision on the customs options. One said the figures were "total bullshit".
But Thompson and his deputy Jim Harra insisted the information had been circulated among Whitehall and were not aware of any challenges to the figures in the last fortnight.
On the proposal itself, Harra noted that in its current form, the "vanilla" max fac would not prevent the need for a hard border in Ireland, and would require "further specific arrangements in place" to achieve that.
One of those options is for a large number of small businesses trading across the border to be exempted from declarations – the so-called trusted trader scheme – Harra said.
"The aim of that would be to relieve the burden from small businesses," he added, noting they would not have to be subject to customs checks and administrative costs every time they crossed the border.
Harra also confirmed that it was "our plan" for the post-Brexit VAT regime to mirror the EU's immediately after leaving the EU, although noted there would be opportunities to change or adapt thereafter.
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