Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

UK faces large EU bill over Chinese imports fraud

UK faces large EU bill over Chinese imports fraud

Court rules government failed to fulfil obligation to collect correct amount of customs duties and VAT
The British government faces paying a hefty charge to the EU after the European court of justice ruled it had been negligent in allowing criminal gangs to flood European markets with cheap Chinese-made clothes and shoes.

Publishing its final ruling on Tuesday, the court concluded that the UK as member state had “failed to fulfil its obligations” under EU law to combat fraud and collect the correct amount of customs duties and VAT on imported Chinese goods. The failures by HMRC date from 2011 to 2017.

Under the withdrawal agreement signed by Boris Johnson, the UK remains subject to ECJ jurisdiction for any breaches of EU law during its time as a member state. The European Commission has been seeking since 2018 to force the UK to pay more than €2bn (£1.7bn) in compensation to the EU budget.

The complaint emerged in 2017, when the EU’s anti-fraud office said British authorities had allowed criminals to evade customs duties by making false claims about clothes and shoes imported from China. It found that more than half of all textiles and footwear imported into the UK from China were below “the lowest acceptable prices”.

In a blow to the government, the EU’s highest court upheld the complaint, finding “that the United Kingdom has failed to fulfil its obligations under EU law by failing to apply effective customs control measures or to enter in the accounts the correct amounts of customs duties”.

It also said the British government had failed to provide EU officials with all the necessary information to calculate the amount of money owed.

But it was not a complete victory for the commission, which had claimed a €2.7bn payment from the UK government to cover the EU’s losses. The court said the commission’s calculations had not met the “requisite legal standard” and instructed EU officials to recalculate the losses based on recommendations in the judgment.

The UK cannot appeal against this final verdict but has the right to challenge the commission over how much money it should pay into the EU budget, once a revised bill is published. The British government has also been ordered to pay four-fifths of the commission’s legal costs.

The case emerged after a 2005 decision championed by the then EU trade commissioner, Peter Mandelson, to abolish quotas on textiles and clothing from all World Trade Organization countries, including China. In subsequent years, EU fraud officials became concerned that shell companies were using fake invoices that undervalued Chinese-made clothes and shoes. In 2014, the EU’s anti-fraud office launched Operation Snake to check import declarations, which included a method to calculate undervalued goods.

British customs officials declined to use the EU method, arguing it was counterproductive and disproportionate. In court, the UK defence team said its customs officers had done everything required to combat fraud, contending that EU law did not mandate any method to calculate undervalued goods. The government was supported by six member states: Belgium, Estonia, Greece, Latvia, Portugal and Slovakia.

The court, however, sided with EU officials, suggesting the UK should have used EU-wide method set out by the bloc’s anti-fraud office, Olaf.

In a statement, the court said: “According to Olaf, fraudulent imports were increasing significantly in the United Kingdom on account of the inadequate nature of the checks carried out by the United Kingdom customs authorities, encouraging the shift of fraudulent operations from other member states to the United Kingdom.”

A UK government spokesperson said they would consider the judgment and respond in full in due course, adding: “Throughout, we’ve made the case that we took reasonable and proportionate steps to tackle fraud in question and that the Commission vastly overstated the size and severity of the alleged fraud.

The UK has always and continues to take customs fraud very seriously and evolves its response as new threats emerge.”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×