The customs arrangement agreed at Chequers will cost businesses around £700m each year to run, the boss of HMRC has confirmed.
Jon Thompson told members of the Lords' EU external affairs committee that the facilitated customs arrangement (FCA), which has prompted the resignations of David Davis and Boris Johnson among others, would result in an additional £700m burden, rising to between £17bn-£20bn in the event of a no deal.
This figure is the same one he applied to Theresa May's previous options, the new customs arrangement, which the FCA virtually mimics and is significantly less than the £20bn he estimated Davis and Johnson's preferred max fac option would have cost.
FCA would require the UK to collect tariffs on behalf of the EU on all goods passing across the border. An amendment passed by MPs this week will make it a legal requirement that the EU reciprocates.
However Thompson admitted that while the governments planned duel tariff system could be implemented by the end of 2020, but the creation of a repayment mechanism will take longer.
“That would be a unique technology project. Its totally new and does require coders to sit down and work out how it would work,” Thompson said.
Treasury Minister Mel Stride also told the Lords committee its impossible to say when the repayment mechanism will be up and running, though it remains “a little way off.”
Its “contingent on a number of different factors, not least the negotiation,” he said. “For the thing to be up and functioning will be a little way off but I couldnt pin a precise date on it.”
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