Following an investigation, on March 1, 2017, the EU’s Anti-Fraud Office (OLAF) found that the UK had been undervaluing imports of textiles and shoes in its trade with China. It is alleged that London, despite regular reminders from Brussels, failed to collect VAT and excise on a huge, multiyear Chinese textile and footwear import scam.
According to the EU’s 2018 Annual Activity report, the UK’s alleged wrongdoing had taken place between 2013-2016, and Anti-Fraud Office noted that this had resulted in losses to the EU’s budget.
The investigation found organised crime groups had been using fake invoices to undervalue goods being imported from China – many of which were destined for the black market in other parts of the EU, investigators claimed.
This has resulted in the European Commission pursuing GBP2.4billion from the UK in customs duties.
An infringement procedure against the UK was launched in March 2018, sending a formal letter to Theresa May’s government outlining the case against them and offering an opportunity to respond.
Brussels even sent a warning to the UK in September 2018, stating that Mrs May had two months to act, otherwise the Commission would refer the case to the European Court of Justice.
Financial sanctions could follow if the court upholds the Commission’s view. The move was the second step in the EU’s legal procedure against the bloc’s states who do not respect its rules.
The UK did this in February 2019, but upon inspection the European Commission in Brussels escalated the case to the Court of Justice in March.
Since then, progress in the case appears to have stalled.
However, the fallout between London and Brussels could mar future trade talks, as Prime Minister Boris Johnson prays his 80 seat majority will provide him with the mandate needed to get his Brexit deal through Parliament.
Current Chancellor of the Duchy of Lancaster, Michael Gove, said in the aftermath of the Conservative Party victory that the Government’s top priority is to leave the EU on January 31 and secure a new trade deal by the end of next year.
He told Sky News: “We will have concluded our conversations with the EU about the new framework of free trade and friendly cooperation by the end of next year.”
Differences remain between the UK and those in the EU, however, as comments by the President of the European Commission last week showed.
Ursula von der Leyen recently replaced Jean-Claude Juncker, and has warned that Boris Johnson should reconsider his plans not to extend the 11-month timeframe available for agreeing a deal on the UK’s future relationship with the EU after Brexit.
Ms Von der Leyen said she had “serious concerns” about Mr Johnson’s lack of flexibility on the deadline.
She said: “It’s not only about negotiating a free trade deal but many other subjects.
“It seems to me that on both sides we must ask ourselves seriously if all these negotiations are feasible in such a short time.
“I believe that it would be reasonable to review things in the middle of the year, if necessary to see if an extension is needed.”
THE EU are ready to resume trade negotiations with Prime Minister Boris Johnson after his thumping election victory last month - but talks could yet turn sour if Brussels go full steam ahead in a huge case against the UK in which the European Commission is trying to sue the Government for billions of pounds.