Customs Fraud Leads to a €2.7 Billion Bill for the UK

Dear Friends,

Further to the below, this past Thursday, the European Commission issued a letter of formal notice demanding that the UK government pay €2.7 billion (~$3.35 billion) in customs duties that should have been collected on imports of Chinese footwear and textiles, but wasn’t due to fraud.  The notice states that:

“Despite having been informed of the risks of fraud relating to the importation of textiles and footwear originating in the People’s Republic of 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 notice alleges that the UK’s failure to address the customs fraud cost the EU €2.7 billion in uncollected customs duties, as well as an unspecified amount in VAT.  The European Commission is now taking formal measures (an infringement procedure) to collect those amounts from the UK government.

As indicated below, the two most likely implications of this development are (i) a more complicated Brexit negotiation, and (ii) increased scrutiny by all EU member customs administrations of footwear and textile/apparel imports (particularly with regard to valuation).

We hope you find this helpful.  If you have any questions about these issues, or what you can do to prepare for greater scrutiny of your imports into the UK/EU, please let us know.

Best regards,
Ted

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