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EU anti-fraud body urges UK to pay 2 billion euros over import scam

By Francesco Guarascio | BRUSSELS

Britain should pay nearly 2 billion euros (1.73 billion pounds) to the European Union to cover lost revenues to the EU budget caused by a scam involving British imports of Chinese textiles and footwear, the EU anti-fraud agency OLAF said on Wednesday.

The investigation body, which has no enforcement powers, recommended the European Commission to recover the money from British authorities.

A spokesman for the EU executive declined to comment on whether the Commission will try to recover the money. A spokesman for Britain’s Revenue and Customs department, the HMRC, said it would be challenging the OLAF calculation.

The results of the investigation were made public as Britain prepares to begin EU divorce talks, potentially adding a new headache for negotiators. One of the most controversial issues in the talks will be the bill Britain will have to pay to leave the EU.

Under EU rules, Brussels has a claim on a share of taxes on imported goods raised in its 28 member states. The proceeds go directly to finance the EU budget.

“OLAF calculated a loss of 1.987 billion euro to the EU budget in terms of lost customs duties due on textiles and shoes imported from China through the UK in the period 2013-2016,” the EU agency said in a note distributed to reporters.

It said that the scam was continuing, hinting that it may cause further damage to the EU budget and a higher bill for Britain.

In London, the HMRC spokesman said: “This is not a bill, it is OLAF’s estimate of evaded duty, and not one that is recognised by our experts who will be challenging OLAF on their calculations.”

The amount is by far the largest ever recommended by OLAF to be recovered. Yearly, it usually urges overall recoveries below 1 billion euros from multiple frauds. In 2015, it recommended the recovery of 888 million euros in total, of which only 97.9 million was from customs scams.

The money recovered is usually well below what is recommended by OLAF. In 2015, only 187 million euros were recovered through judicial action in member states and returned to Brussels.

($1 = 0.9482 euros)

(Reporting by Francesco Guarascio and Kylie MacLellan; Editing by Mark Trevelyan)

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