Both the EU and the UK would want to plug potential leaks of billions in tariffs on trade across a frictionless Irish border after Brexit and to prevent vast smuggling networks from developing. The UK vaguely suggested it will track goods when they reach warehouses and final destinations for collecting tariffs. That would require huge increases in record keeping by import and export firms, which might be similar to onerous VAT reporting.
For instance, instead of checking a truckload of goods at the border and imposing a tariff bill there, customs and excise departments might have to monitor shipments at multiple delivery points on that truck's journey. Each delivery point would be required to record the shipment and make a payment of a tariff. In practice, customs would be overwhelmed by the increase in tariff transactions and would have to rely on self reporting by businesses.
This self reporting in a frictionless border would create incentives for vast smuggling networks. A truck crossing into the Republic might deliver goods to a customer who pays the bill to an Irish subsidiary company and in collusion with the seller fails to record the tariff due.
Off the books smuggling would include shipments of goods with no paper trail and paid for in cash.
Software and electronic tracking could be developed to reduce smuggling and cheating on tariffs but the costs might be greater than the uncollected tariffs. Under the Blair government, the NHS attempted to create a single computerised file for all patients but gave up after the cost proved too great.