Theresa May's negotiating paper on the Brexit transition has been leaked to Business Insider.

Britain calls for the EU to discuss extending the transition period beyond December 2020.

May's spokesperson insists transition won't last beyond two years.

Britain also fails to include demand to end freedom of movement rights for EU citizens during the transition.

This is a major climbdown from previous UK insistence that EU citizens will be treated "differently" during the transition.

Senior EU source tells Business Insider that they will not accept any change to citizens' rights during the transition.

LONDON — The UK government has called for the EU to discuss extending the Brexit transition period indefinitely beyond December 2020, in a move that is likely to enrage Conservative Brexiteers.

The EU has previously insisted that Britain must be fully out of the EU by December 31, 2020, meaning a transition period would not be able to go beyond 20 months.

However, the UK's Brexit transition guidelines leaked to Business Insider, calls on the EU to discuss leaving this end date open indefinitely.

In a draft version of the text obtained by BI, the government states that "The UK believes the [implementation] period's duration should be determined simply by how long it will take to prepare and implement the new processes and systems that will underpin the partnership. The UK agrees this points to a period of around two years but wishes to discuss with the EU the assessment that supports its proposed end state."

This was confirmed in the final version which was released late on Wednesday afternoon.

However, prime Minister May still expects the transition period to last around 24 months, her spokesperson said on Wednesday afternoon.

"They've [the EU] talked about 21 months, we're talking about 24 months," they told journalists following PMQs.

A spokeperson for May later added: "There will be a specific date that will indicate the end of implementation that will be written into the [transition] agreement."

The document also signaled a significant climbdown on the free movement of EU migrants after Brexit, as it set out its official negotiating position on the transition period.

In the document, May's government chose not to explicitly reject the EU's demand that all migrants who arrive in Britain during transition must be given the same rights free movement rights as those who arrived beforehand.

This represents a significant surrender from the prime minister, who earlier this month insisted that EU citizens who arrive during the transition period must be treated "differently" to those who arrived before Brexit day in March, 2019.

A Whitehall source insisted the government was not backing down on the free movement issue, however, telling Politico: "We are not conceding it — but we are also not putting a roadblock in the way at the outset."

However, a senior EU source told Business Insider that they would not accept any changes to the rights of EU citizens living in the UK during the transition.

"We will stick to our red line that EU citizens must not be treated differently during transition," the source said.

The concession by May's government follows warnings from Parliament's Home Affairs committee last week that creating a two-tier immigration system in time for Brexit day is simply not "feasible" in time because the department is starved of time, staff and resources.

A 'no harm' transition

The UK has also demanded a mechanism for protecting Britain from any "harm" brought about new rules and regulations implemented by the EU during transition (or "implementation period" as it's also known.)

The guidelines are set to annoy the Conservative Party's most staunch Brexiteers.

Over 60 of them have signed a letter addressed to May's Cabinet laying out a list of demands for their vision of Brexit.

The letter, signed by Tory MPs including Jacob-Rees Mogg, Priti Patel, former leader Iain Duncan-Smith, was made public on the same day the UK government submitted its transition negotiating position to Brussels.

In it, Brexiteer MPs demand Britain diverges from EU regulations and is able to sign its own free trade deals after March 2019. This will be difficult to square with May's intention on keeping Britain in the customs union and single market during the 20-month transition. Being in the customs union prohibits you from signing trade deals with other countries.

One leading member of the group, Conservative MP Andrew Bridgen, told Business Insider on Wednesday that they would not accept a "stasis" transition.

"We can't have a transition period where we just have stasis because it isn't stasis is it? Because the EU has already announced many, many pieces of legislation they want to bring in which will effect the UK which we will not have any say over."

He added: "Why are we talking about transition anyway? We won't need a transition if we don't get a free trade deal... Why would we want to drag it out for two years and then have no deal at the end?

However, Conservative MP Nicky Morgan described the letter as a "ransom note," telling The Guardian: "This isn’t a letter, it is a ransom note. The ERG clearly think they have the prime minister as their hostage."

Earlier on Tuesday, Business Insider reported that the European Parliament is planning to call for Britain to have the option of an "association agreement" with the EU after Brexit, which could allow it "privileged" access to the single market and membership of EU agencies. The pound climbed 0.5% against the Euro following the news.