UK faces paying Brussels billions after ECJ ruling on Chinese shoe scam

The UK faces a bill from Brussels of up to €2.7bn after the European Court of Justice ruled on Tuesday that Britain failed to stop a cheap Chinese shoes scam.

Luxembourg Judges agreed with the European Commission that the UK had not applied EU customs rules properly when it was a member state of the bloc, which allowed criminal gangs to flood Europe with cheap clothes and shoes.

But the EU’s top court told Brussels it had to recalculate the amount the UK owed because the way the £2.2bn bill was totted up was not legally watertight.

The UK failed to record and collect the correct customs duties and VAT for imports of Chinese footwear and clothes , the European Court of Justice (ECJ) said.  The failures date between 2011 and 2017 and the UK did not use EU- recommended lowest price valuations to stop fraudulently underpriced imports.

“The United Kingdom has failed to fulfil its obligations under EU law by failing to apply effective customs control measures or to enter in the accounts the correct amounts of customs duties,” the court said.

That cost the EU its share of customs duties, which go towards its budget as part of its “own resources”, and the UK is now expected to repay.

OLAF, the EU anti-fraud body, has said the UK should pay €2bn euros in missed duties. The commission puts the bill at about £2.2bn but, after arguments by UK lawyers, the ECJ said the method to reach that figure was not up “to the requisite legal standard”.

Judges said it was up to the commission to now recalculate how much the UK should pay. Britain is likely to contest that eventual figure, which could lead to another ECJ hearing. The Government said it would respond to the judgement in due course. 

Under the terms of the Brexit deal, the UK could eventually be bound by a final decision by the EU’s top court. It was agreed in the Brexit negotiations that cases begun before the UK left would largely run their course as if Britain was still a member state. 

The failure to properly implement the customs code is politically sensitive because the EU allows the UK to police its customs rules on the Irish Sea border as part of the Northern Ireland Protocol.

The UK has demanded that disputes with the EU are not settled in the ECJ, as part of the continuing negotiations to cut protocol checks.

The British Government has repeatedly said the days of the UK sending billions to the EU were over after Brexit so will be under pressure from backbenchers to contest the bill.

The UK continues to pay off the “Brexit bill” of about £39bn, which it agreed as part of the negotiations to leave the EU. 

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