Senior conservatives have signaled they are not prepared to support a no-deal brexit as they inflicted a defeat on the government in parliament.

MPs backed an amendment to the finance bill, which would limit the scope for tax changes following a no deal unless authorized by MPs, by 303 to 296 votes.

Twenty Tories rebelled and, while its practical effect will be limited, Labour said it was an “Important Step”.

But Brexiteers said the UK would leave the EU on 29 March, come what may.

Before the vote, no 10 said a defeat would be “inconvenient rather than significant”, with experts pointing out there were other mechanisms available to government to raise money.

Former Cabinet Ministers Michael Fallon, Justine Greening, Dominic Grieve, Ken Clarke and Sir Oliver Letwinwere among the 20 conservative mps who defied the government by backing a cross-party amendment tabled by Yvette Cooper.