Senior Brexiteer MPs have delivered an “ultimatum” demanding Theresa May drops one of the government’s preferred post-Brexit customs options.
A 30-page document passed to the BBC says a “customs partnership” would make meaningful trade deals “impossible” and render the International Trade Department “obsolete”.
It comes ahead of a key meeting of senior ministers on Wednesday.
They will discuss the different options to replace customs union membership.
The issue threatens to split Wednesday’s meeting of the Brexit sub-committee and could have long-term implications for the government.
The BBC understands chancellor Philip Hammond favours a customs partnership whereby Britain collects the EU’s tariffs on goods coming from other countries on the EU’s behalf.
The partnership solution could redress the Irish border question, as there would be no hard customs border between the UK and the EU.
But in their dossier the Brexiteer MPs say the idea should be “swiftly removed from the table”.
Some Brexiteer cabinet ministers are understood to have seen the paper, which lists “nine fundamental problems” with the partnership model.
According to the Press Association, Downing Street has been privately warned that a customs partnership could collapse the Government, as committed Brexiteers on the Tory backbenches regard it as unacceptable as it would deliver “Brexit in name only”.
Former Brexit minister David Jones told BBC’s Newsnight: “Certainly there would be a lot of very disappointed Brexiteers if we were to end up in a customs partnership.
“The Prime Minister’s calculations have got to include exactly what reaction there would be from the parliamentary party and the wider Conservative Party if we were to enter into that sort of relationship.”
BBC political editor Laura Kuenssberg said several ministers on the key Brexit sub-committee were understood to be urging Theresa May to ditch the “hybrid” customs partnership model.
There are concerns about whether it is practical, and sources have suggested it has been nicknamed the “unicorn” model in Westminster, she said.
“Senior figures in Number 10 accept privately that the customs partnership can’t be proven to be viable in the short term, but insist that it is potentially a workable option in the longer term,” she said.
“It’s suggested that tomorrow the prime minister will be backed by the chancellor in keeping this option on the table.”
The document leaked to the BBC was prepared by a QC, and was sent by senior backbenchers and former ministers to Number 10 on Sunday.
Analysis by BBC political editor Laura Kuenssberg
A senior Tory said “the customs partnership is the breaking point”, suggesting that if No 10 doesn’t do their bidding, they could withhold their support.
Of course the stakes are high on all sides, tempers are hot, and it is not certain that they would deliver on those kinds of threats.
But Theresa May warned in her Mansion House Speech that the UK won’t get everything it wants in the EU negotiations.
The time when she has to say that forcefully in negotiations with her own party may be coming fast.
The question is whether that’s feasible, one former minister said that Theresa May “already isn’t leading the party”.
Another told me it’s like “the politicians have all gone missing”.
Wednesday’s meeting is not expected to reach a final decision on the proposals.
But the document warns against continued deliberations in government, saying that “further delay is itself a decision”.
Downing Street sources denied the document was an ultimatum, dismissing it as part of the policy-making process.
Looking ahead to Wednesday’s meeting Number 10 said: “The government has put forward two proposals and they will be discussed by the government further.”