Brussels takes action against UK over Chinese shoe fraud

(BRUSSELS) - The EU Commission sent a 'reasoned opinion' to the United Kingdom Monday on account of its failure to act against customs fraud relating to Chinese shoe imports and resulting losses to the EU Budget.

The 'reasoned opinion' is the second step in the formal infringement procedure for this case, which the Commission says it is taking in order 'to protect the financial interests of the EU'.

In March this year, the Commission opened the infringement procedure following a 2017 report by the EU's anti-fraud body OLAF, which found that importers in the United Kingdom evaded a large amount of customs duties by using fictitious and false invoices and incorrect customs value declarations at importation.

The Commission says that further inspections confirmed the very large scale of this undervaluation fraud scheme operating through British ports between 2011 and 2017.

Despite having been informed of the risks of fraud relating to the imports of textiles and footwear originating from the People's Republic of China since 2007, and despite having been asked to take appropriate risk control measures, the EU executive says the United Kingdom failed to take effective action to prevent the fraud.

The Commission has calculated that the infringement of EU legislation by the United Kingdom resulted in losses to the EU budget amounting to €2.7 billion (plus interest and minus collection costs) during the period between November 2011 and October 2017.

In addition, it says the United Kingdom also infringed EU Value Added Tax legislation, leading to additional potential losses to the EU budget.

All EU Member States are liable for the financial consequences of their infringements of EU law.

The United Kingdom now has two months to act; otherwise the Commission may refer the case to the Court of Justice of the EU.

Further information: March 2018 infringements - key decisions