Leave-supporting Tory MPs have privately indicated to the Government they are willing to mount their first rebellion over a new post-Brexit customs union, Sky News understands.

Conservative Brexiteers have let it be known to ministers they will table amendments to a piece of Treasury legislation, which provides fast-track powers for the Government to remain in a customs union with the EU.

It would be the first time Leave-backing Tories will have rebelled on Brexit legislation.

So far, rebellions have only come from the Conservatives' europhile wing.

The legislation, part of the Taxation (Cross Border Trade) Bill currently going through the House of Commons, is a key bit of law for establishing a domestic customs system post-Brexit.


It was given a second reading by MPs earlier this month.

But there is considerable unhappiness about the bill's so-called "Henry VIII powers" creating a "back door" into a long-term customs union arrangement, which - Brexiteers claim - would "negate Brexit".

Image: The PM has vowed to leave the EU's common tariff on imports

Jacob Rees-Mogg, the new chairman of the influential European Research Group (ERG) of Tory MPs, told Sky News: "I'm sure the Commons will look at this part of the Bill very closely, because we don't want to stay in the EU by the back door.

"It would give the Government the potentiality of getting back in the customs union and negate a major part of the Brexit vote. It's very bad news.

"We'll have to see what happens at the committee and report stage [of the bill]. It easily could be amended.

"The [Brexit] bills have to work in unity - you can't have one bill undermining the bill you passed the week before, that would not make any sense."

The legislation also specifically allows for the application of a common tariff in a new customs union.

At her Lancaster House speech last year, the Prime Minister said she did not want Britain "to be bound by the Common External Tariff" of the EU, which applies duties on imports into the bloc from non-EU countries.

Image: Influential Tory Jacob Rees-Mogg expressed concerns at planned legislation

When asked if the proposed Treasury legislation was a rowing back from Theresa May's Lancaster House address, Mr Rees-Mogg added: "Lancaster House is Government policy, I fully support the Lancaster House speech.

"It gets the advantages of Brexit and is clear.

"I'm as confused as you are as to why anyone in the Treasury would want to undermine the Prime Minister.

"If Treasury civil servants are undermining the Prime Minister, that is a constitutional issue of considerable importance."

The Government has attempted to reassure potential Tory rebels that the legislation merely provides a negotiating option, and necessary backing for arrangements with the Isle of Man and Jersey.

Image: Manufacturers are complaining they have been left in the dark on customs plans

Ministers also told Sky News the proposed powers are designed for the Brexit transition deal with the EU, although that is not specified in the actual wording of the legislation.

"We will be leaving the customs union and the Common External Tariff," said one minister.

Some Tory MPs, however, feel such reassurances need to be seen written in law.

The legislation comes after the Government agreed last month, in the first phase of Brexit negotiations, to a fall-back option to protect Irish border arrangements of "full alignment" on an unspecified number of aspects of the customs union.

Tory MPs have talked of a "proxy war" between themselves and the Confederation of British Industry (CBI) over the issue of a new customs union with the EU, reflecting tensions within Government.

The Cabinet is yet to finalise its view on the "end state" of Brexit talks.

Many manufacturers are complaining they have been left in the dark on new post-Brexit customs arrangements, in particular over whether they will have to declare "rules of origin" of components and finished exports and imports, as is standard procedure outside a customs union.