A government minister has admitted the UK could rejoin the EU's customs union after Brexit.
Speaking last night, as part of the debate over the Cross Border Trade Bill, financial secretary to the Treasury Mel Stride told MPs they would be able to vote on entering a customs union after leaving the EU, but insisted Brexit meant the UK would leave on March 29 2019.
He said: "“Clause 31 [of the bill] makes provision for the Government to enter into – or this country to enter into – a customs union with another territory.
“That territory could be the existing customs union of the European Union after we have left the European Union, it could be another territory apart from that.”
The move was welcomed by pro-Europe MPs including Ken Clarke, who said he was "reassured" by the proposals, although said he would be "considerably reassured" if that meant the UK could rejoin the customs union immediately after leaving.
Stride replied that Brexit was inevitable, but added the clause "does indeed facilitate our future ability to enter into customs union arrangements with other customs unions or territories, subject to the express will of Parliament".
The main thrust of the debate, however, was on the VAT burden posed on businesses. The Bill could force firms to pay VAT upfront on goods imported from the EU.
Treasury committee chair Nicky Morgan has written to HMRC boss Jon Thompson to seek clarification on the proposed new rules, in particular on the cost to businesses and consumers, the options being considered to mitigate these costs, and the likelihood of the UK participating in the EU VAT area as part of its end-state relationship with the EU.
This morning she said: “As the reality of Brexit begins to bite, its implications on tax are yet to be fully explored.
“The government has already acknowledged that this would create an additional burden for businesses, and Autumn Budget 2017 committed to ‘look at options to mitigate any cash-flow impacts.”