Tension between the UK Government and the European Commission which has built up during the Brexit negotiations is hardly likely to have been eased by a demand from Brussels that the UK should pay an extra €2.7 billion.
This is nothing to do with the so-called Divorce Bill but has resulted from a dispute over customs duties going back several years.
The Commission has sent a letter of formal notice to the UK because, it argues, the Government refuses to make customs duties available to the EU budget, as required by EU law.
A 2017 report by the EU fraud office found that importers in the UK had evaded a large amount of customs duties by using fictitious and false invoices and incorrect customs value declarations at importation.
Further Commission inspections brought to light a dramatic increase of the scale of that undervaluation fraud scheme operating through the hub in the UK between 2011 and 2017.
“Despite having been informed of the risks of fraud relating to the importation of textiles and footwear originating in China since 2007, and despite having been asked to take appropriate risk control measures, the United Kingdom failed to take action to prevent the fraud,” the Commission claimed.
It calculates that the infringement of EU legislation resulted in losses to the EU budget amounting to €2.7 billion (minus collection costs) during the period November 2011 until December 2017.
In addition, the Commission argues, the UK infringed EU VAT legislation, leading to potential losses to the EU budget.
If the Commission is unhappy with the UK’s response, it may refer the case to the EU’s Court of Justice (CJEU) for a decision.
