Businesses could be landed with a £20bn bill if the UK decides to opt for the so-called "max fac" solution for customs checks after Brexit, it has been claimed.

The forecast was made by the chief executive of HM Revenue and Customs Jon Thompson, who told MPs firms could have to pay £32.50 for each customs declaration under the so-called "max fac" solution.

Dover and Deal MP Charlie Elphicke said the figure was ‘absurd.’

“We do £400 billion of trade with the EU. They sell £96 billion more to us than we sell to them. The £20 billion figure for costs is 5% of the total, which is clearly absurd.”

“People will be thinking they’ve heard this all before with the pre-referendum Project Fear. Where was the immediate recession the Treasury promised us?”

“What we need to see is less doom-mongering and more investment now in state-of-the-art border systems that will enable trade to continue at Dover that is frictionless and inexpensive.”

South Thanet MP Craig Mackinlay, who sits on the Exiting the EU Committee, cast doubt on the figures.

He said firms already had compliance costs and that an equivalent system in Switzerland amounted to a fraction of its GDP (Gross Domestic Product).

“I’d like to see these figures as I find it hard to believe that it would cost that much. If you look at Switzerland, the costs represent about 0.01% of their GDP and the UK equivalent would be a fraction of that,” he said.

Mr Thompson told MPs on the Treasury select committee any system may take between three and five years to bed in.

“So you need to think about the highly streamlined customs arrangement costing businesses somewhere in the late teens of billions of pounds, somewhere between £17bn and £20bn.”

While the forecast was described by Downing Street as speculation, it acknowledged "issues" remained with both customs options being considered.

Mr Thompson said the extra form-filling facing British and foreign companies as they crossed a proposed “streamlined” customs border could cost between £17bn-£20bn. The scheme would be as frictionless as possible, using new technology and introducing the concept of “trusted traders”.

Under what is thought to be Theresa May's preferred option of a "customs partnership" the UK would collect tariffs set by the EU customs union on goods coming into the country.