Temporary arrangements could allow trade deals to be negotiated with other countries, something European Union members are forbidden from doing.
NAN reports that the EU's initial offer suggested that all United Kingdom nationals residing in the bloc would be able to benefit from all the rights they now enjoy, including the freedom of movement.
"The government's ambitions for customs arrangements post-Brexit are, at present, just that, and it will take time and care to ensure that all the subtleties of current operations can be incorporated into future plans".
The organisations called for a tariff-free goods trade agreement between the United Kingdom and European Union, regulatory equivalence and mutual recognition of standards on an ongoing basis to ensure continued mutual access for both goods and services, and a flexible system for the movement of labour and skills.
The U.K. will not commit to a Brexit bill figure by the October EU summit, Brexit secretary David Davis said.
The proposals for an interim customs regime, if they can be agreed, go some way in protecting business from a cliff-edge.
No actual timeframe has been mentioned, although some Cabinet ministers have suggested it will have to expire before the next scheduled general election in 2022.
The document sets out two broad approaches to a possible customs deal.
"They might promise frictionless trade, but they are offering a red tape bombshell for British business".
For example, proposals for goods that do not comply with the EU's trade policy would need a "tracking mechanism" where traders could claim "refunds" if tariff trades differ.
Britain said that "while the government has looked at precedents set by customs agreements between other countries, it is not seeking to replicate another country's model".
John McGrane, director of the association, said the ideas were a constructive contribution to the negotiations.
The arrangement would prevent the worst case cliff-edge scenario for businesses by allowing tariff free trade between the United Kingdom and European Union to continue until a new trade deal is struck. Our research shows that non-tariff barriers are just as important as tariff barriers in determining where small businesses export to.
"The quicker #UK & EU27 agree on citizens, settling accounts and#Ireland, the quicker we can discuss customs & future relationship", tweeted Michel Barnier, the Commission's chief negotiator on Brexit, while the European Parliament's negotiator on Brexit Guy Verhofstadt described plans of being "in & out of the customs union" and "invisible borders".
A European Commission spokesman said: "We will now study the United Kingdom position paper on customs carefully in the light of the European Council guidelines and the council's negotiating directives".
The British government's proposals for "a new customs arrangement that facilitates the freest and most frictionless trade possible in goods between the United Kingdom and the EU" was dashed by European minister. He also echoed Barnier's line that the United Kingdom needed to secure a deal on citizens rights' and the financial settlement, before embarking on trade talks.