Downing Street has said that the UK will not seek an “off-the-shelf” model for a post-Brexit transitional period, contradicting the position Philip Hammond is believed to have expressed to business leaders.

The chancellor has been pressing for a simple transition arrangement to maintain trading conditions with Europe for at least two years after Brexit, mirroring arrangements the EU has with countries such as Norway and Switzerland that give them access to the single market.

However, on Monday a No 10 spokesman said: “There were reports last week that we were looking for an off-the-shelf model. We are not looking for an off-the-shelf model. Precisely what the implementation model will look like is up for negotiation.”

It is understood that Hammond believes the UK cannot negotiate a bespoke transitional deal in the time available – nor would it make sense to enter into prolonged negotiations about a temporary arrangement.

The chancellor is reported to have told business leaders that the UK was seeking a “standstill” with full access to the single market and customs union, according to the Financial Times, as well as an “implementation phase” for new customs systems and immigration checks once a permanent deal is finalised with Europe.

A senior cabinet source privately used the same phrase – “off the shelf” – when describing an implementation deal to the Guardian last week, suggesting that free movement between the UK and continental Europe would continue during that time.

Hammond has irritated some cabinet colleagues, with one telling the Guardian: “He needs to put a sock in it, stop undermining the boss and get on with his day job.” They said he was guilty of “crazy behaviour”.

The EU has previously said that during any transitional period, Britain would no longer have voting rights in the EU, but would need to continue to pay budget contributions, accept rulings handed down by the European court of justice, and accept the free movement of citizens.

Two “off-the-shelf” models that could apply to the UK during the transition period include European Economic Area membership, which Norway has. It includes single market access and exemption from some EU rules, though members pay budget contributions and accept free movement.

The Swiss model, governed by the rules of the European Free Trade Association (EFTA), means access to EU markets for some but not all areas of trade, with no duty to apply EU laws apart from some trade regulations, though free movement also applies.

There was scepticism in some quarters about the UK’s ability to negotiate a transitional deal that is not based on an existing model. James Chapman, the former special adviser to the former chancellor George Osborne and the Brexit secretary, David Davis, said a rejection of an “off the shelf” model was “madness” given the timescale. “We cannot expend limited negotiating time trying to sort out some new kind of transitional deal,” he tweeted.

Chapman also suggested that the UK would have to formally leave the EEA separately from the EU, as all European Union countries are automatically members of the EEA. “We haven’t triggered EEA exit and won’t get through parliament if we try,” he tweeted.

Lady Anelay, a Brexit minister, told the House of Lords last week that the UK would formally exit the EEA at the same time as the EU, but hinted that opting for a Norway-style arrangement for an interim period was desirable. “We are trying to achieve the same thing: we want to find an implementation period and interim agreements from the negotiations that will help this country to succeed and achieve prosperity for all,” she said.

Others in government feel strongly that a transition deal should not be modelled on EEA membership. Steve Baker, a Brexit minister and outspoken leave supporter, said earlier this month that any talk of the UK staying in the EEA and single market after Brexit amounted to “blood in the water”.

On Monday, Downing Street also repeated an insistence that free movement would end when the UK leaves the EU, although it is understood that in practice a free flow of labour and travel is likely to continue during the transition. “Free movement will end in March 2019. We have published proposals on citizens’ rights. Last week, the home secretary said there will be a registration system for migrants arriving post-March 2019,” the spokesman said.

“Other elements of the post-Brexit immigration system will be brought forward in due course. It would be wrong to speculate on what these might look like or to suggest that free movement will continue as it is now.”

The home secretary, Amber Rudd, made clear last week that she expected that EU citizens would be free to continue coming to the UK during the transition period, as long as they registered.

With the prime minister on holiday, the chancellor has made a series of interventions, including claiming that the UK’s relationship could look “similar in many ways” for some time after the formal departure from the bloc in March 2019.

Separately, Hammond also denied that he wanted to turn the UK into a deregulated, low-tax economy. He told France’s Le Monde: “I often hear it said that Britain is considering participating in unfair competition in regulation and tax.

“That is neither our plan nor our vision for the future. The amount of tax we raise as a percentage of our GDP puts us right in the middle of the pack.” He argued that after Brexit, the country would keep a “social, economic and cultural model that is recognisably European”.

No 10 said the prime minister still believed that “no deal is better than a bad deal”. It was “obviously not in Britain’s interests to sign up to a deal which would punish the UK”, a spokesman said. “What we are fully committed to doing is securing a good deal for Britain and for the European Union and we are making good progress towards it.”

No 10’s intervention came as the ministers Jeremy Hunt and Sir Michael Fallon sought to play down reports of cabinet splits, especially between Hammond and the international trade secretary, Liam Fox. Hunt said the cabinet was “absolutely united” behind a gradual, business-friendly Brexit. The aim was “to avoid a cliff edge as we move to a new immigration policy”, Hunt said, arguing that this would need a gradual implementation process.

Fox has insisted that there is no cabinet-wide agreement on migration not being controlled after March 2019. “If there have been discussions on that, I have not been party to them. I have not been involved in any discussion on that, nor have I signified my agreement to anything like that,” he told the Sunday Times.