Downing Street has set out some of the detail of how customs could be handled after Brexit.
No 10 says its new plan - dubbed the "facilitated customs arrangement" - offers "the best of both worlds".
The details come as Theresa May and Angela Merkel prepare to discuss the progress of Brexit negotiations when they hold talks in Berlin later, reports the BBC.
The UK prime minister is facing calls from the EU to clarify the UK's position.
According to Number 10, the new plan would allow the UK the freedom to set its own tariffs on goods arriving into the country.
Technology would be used to determine beforehand where they will ultimately end up - and therefore whether UK or EU tariffs should be paid.
Downing Street says it's confident the arrangement would be partly in place by the end of the proposed transition period in December 2020 - with the system being fully operational by the next general election.
On regulations, it's understood that the UK would closely mirror the EU's rules - but parliament would be able to decide where to deviate.
However, the arrangement has not been explained in full - and it is not clear whether the cabinet will back the plan, or whether the EU would agree.
A source close to Brexit Secretary David Davis refused to comment on a Daily Telegraph report that he had already told Mrs May the plan is unworkable.
Mr Davis and Mrs May are "working closely on what will be presented on Friday", the source said.
The UK is leaving the EU in March 2019, but has yet to agree how it will trade with the remaining EU members - who are part of a single market and a customs union.
In particular, a solution is needed to avoid new border checks between Northern Ireland and the Republic when the UK is outside the customs union.
Eurosceptic MPs have warned Mrs May against tying the UK to the EU after it leaves, saying this will prevent it from striking its own trade deals with other countries.
After two models for customs were criticised, Downing Street has come up with a "third way" solution, to be presented to the cabinet when it gathers at Chequers on Friday.
After Friday's meeting, the government is expected to publish a White Paper setting out its plans in detail.
