Independence would lead to new border controls with England unless Scotland rejected European Union membership, according to leaked UK Government legal advice.

An independent Scotland would be forced to join a European free travel area that the UK has refused to sign up to, it warns.

The Herald revealed yesterday that UK Government lawyers had warned Scotland would not automatically remain a member of the EU. Instead, an independent Scotland would have to reapply, a process that could cost billions in lost funding and take up to three years, advice seen by The Herald shows.

Scotland would also be expected to fulfil a number of criteria as a “new” member of the union, including membership of the euro.

However, the advice reveals the price of joining the EU would also be to sign up to the Schengen Agreement – whereby free travel is allowed between many European countries.

As the UK is currently outside the Schengen area, and is determined to remain so, Scotland’s membership would trigger new controls, such as passport checks, at the border with England.

Being forced to sign up to Schengen would also force Scotland to leave the current free travel area between the UK and Ireland, according to the official advice.

Scotland would not be able to control those entering the country from the Schengen area, potentially leading to an increase in economic migrants.

Labour MPs have previously warned that independence could lead to travellers being forced to show their passports at Gretna.

The SNP has always denied that independence would lead to controls at the border.

The party insists that there would be easy and free movement between Scotland and England, much as there is now, and free access to each other’s markets.

And it has denounced as a “myth” the idea an independent Scotland would not automatically become an EU member in its own right.

The original Schengen Agreement was signed in the mid-1980s but not implemented until five years later.

It created a borderless Schengen area, which allows international travel with no internal border controls.

The Schengen area currently consists of 25 European countries, and means anyone can travel from Tallinn to Lisbon without having to show a passport.

It was designed to ensure freedom of travel and boost tourism across participating member countries.

However, the UK has always rejected its terms and successive governments have made clear that they will stay outside the common travel area.

Yesterday the Scottish Government insisted the legal advice was wrong and Scotland would automatically remain part of the EU.

A spokesman for the First Minister said: “As far as the leaked section of this Westminster document is concerned, it is a case of ‘ask a silly question, get a silly answer’.”

He added: “When there are 27 existing EU members – and Croatia, Macedonia, Turkey, Iceland and Montenegro are lined up to join – the idea that oil-rich, resource-rich Scotland would not continue our EU membership is a particularly decrepit argument against independence.”

He also insisted an independent Scotland would not be forced to join the euro as a process of EU membership.

“This is complete nonsense,” he said. “The issue of the euro would be decided by a referendum of the people of Scotland when the economic circumstances were right – until such a point, an independent Scotland will retain sterling as at present.”