Over a long-running dispute between the UK and the EU regarding fraud on Chinese clothing, the UK has paid EUR678m to the European Commission (PS583m).
This follows a ruling by the EU’s highest court that the UK failed pass on the correct amount tax to the EU for imports, between 2011 and 2017.
In 2018, the UK was sued by the commission for EUR2.7bn (PS2.4bn).
While the EU judges upheld March’s claim by the Commission, they rejected the method it used to calculate the amount it owed.
The Treasury stated in a statement that it has yet to receive a new recalculation by the commission after the European Court of Justice’s (ECJ) ruling.
It claimed that it had paid EUR678m to the UK on 10 June. This was “the amount UK considers due at present”, in order to protect taxpayers against interest payments.
After an 11-month transition period, the UK officially left the EU’s legal system in January 2021.
The ECJ can still make decisions in cases relating the UK’s application of EU law prior to Brexit.
After being warned by Olaf in 2017, the UK was accused of failing to take adequate steps to prevent fraud.
Olaf warned EU member countries about the danger of footwear and clothing being undervalued from China via shell companies.
The ECJ ruled that the UK had failed to adequately prevent fraud from imports and that it had not provided sufficient information to the Commission.
It found that imports were undervalued and the UK had not paid the correct amount of VAT or import taxes to the commission.
The UK, as an EU member at that time, was required to pay the Brussels-based body the necessary payments as part of its contribution towards the EU budget.
The UK challenged the amount owed and argued that Olaf’s method of calculating the underpayments was inappropriate.
The Treasury stated that its EUR678m had been “paid in full” both the amount due prior to the 2014 method being introduced and the amount the UK considers due for 2015 to 2017.
It added that the UK was responsible for interest payments of 16% plus Bank of England base rates on any outstanding amounts. This amount was paid to “protect UK taxpayers against significant ongoing interest accrual”.
It stated that it would examine any new claim made by the commission in the 2015-2017 period and “not hesitate” to reject any claim it believes is not in accordance with the ECJ ruling.
The BBC reached out to the European Commission for comment.
