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Mar 8, 2017
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EU anti-fraud body says UK owes €2bn for textile import 'scam', UK denies wrongdoing

By
Reuters
Published
Mar 8, 2017

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


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

Some politicians and analysts in the UK have suggested the OLAF announcement is part of a punitive approach being taken for Britain voting to leave the EU or as a bargaining chip the day before UK Prime Minister Theresa May goes to Brussels to meet EU leaders.

Britain's revenue and customs body HMRC said In a statement that it had an “excellent record in tackling fraud and rule-breaking of all kinds”.

OLAF, which has no enforcement powers, recommended the European Commission to recover the money from British authorities but a spokesman for the EU executive declined to comment on whether the Commission will try to do so. A spokesman for 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 could 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 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 issue 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."

Additional reporting by Sandra Halliday
 

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