HMRC chief: 'No deal' Brexit could cost British firms up to £20bn
3 min read
Crashing out of the European Union without a Brexit deal could cost British firms up to £20bn, the UK's top taxman has warned.
HM Revenue and Customs chief Jon Thompson angered Brexiteers last month when he estimated that their preferred plan for future customs ties with Brussels - known as 'maximum facilitation' - could land businesses with £20bn-worth of extra burdens.
Speaking to MPs on the Treasury Committee today, Mr Thompson stood by those estimates, and suggested similar costs could be imposed if the UK walked away from talks with Brussels and reverted to World Trade Organisation tariffs on goods.
"We need to be really, really clear," he told Committee chair Nicky Morgan. "That is definitely not the Government’s preferred option... and it’s not the Government’s plan and the Government’s been very, very clear about where we are.
"But nevertheless if we move to WTO rules then that would definitely require customs declarations. So it would be similar sorts of costs."
Senior Brexit-backing MPs, including Conservative Jacob Rees-Mogg, have urged the Government to continue to plan for a 'no deal' Brexit in order to strengthen the UK's hand in talks with Brussels.
But The Sunday Times this weekend reported that Whitehall had drawn up stark contingency plans for the possibility that Britain is left without food, fuel and medicines after crashing out of the bloc.
While HMRC bosses today said they did not recognise those briefings, Mr Thompson pushed back at rival estimates of the impact of 'max fac', saying the department stood by its sums and had briefed ministers on the potential costs.
"I don’t think there’s been much debate within the civil service," he said. "There have clearly been some reactions to what I [said]. The estimate we’ve given [...] has been in ministerial papers."
His second-in-command Jim Harra meanwhile added: "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’s been any challenge or any difference to them."
The evidence came as ministers continue to thrash out plans for the out the UK's post-Brexit trading arrangements.
It emerged over the weekend that a Cabinet group set up to look into the rival 'new customs partnership' plan once favoured by Downing Street has met just once in contrast to six meetings for the 'max fac' group.
Eurosceptics have heaped scorn on the partnership model, arguing that it leaves the UK too closely tied to Brussels and will leave Britain as the "taxman of Europe".
Instead, they believe 'max fac' - which will rely on technology and self-certification by businesses to try and keep trade friction to a minimum - offers the best way of ensuring Britain can strike independent trade deals after it leaves the EU.
But a detailed letter from Mr Thompson to the Committee - also published today - fleshes out HMRC's estimate of the costs of max fac.
According to the department, the figure comes from an estimate of the "ongoing annual administrative burden" for businesses which would have to make new customs declarations, as well as set-up costs for the "at least 145,000 UK businesses that trade only with the EU and are likely to have little experience of interacting with the customs regime" at present.
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