BREAKING: EU to fine Britain £2bn after fraud investigation

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BRITAIN could be hit with a fine of almost £2BILLION by the European Union (EU) for allowing one of the biggest fraud rings ever to flog cheap Chinese goods to Europe via the UK.

An investigation by the EU’s anti-fraud office, OLAF, and French authorities in the first half of last year claimed British customs officials ignored repeated warnings to prevent Chinese clothing and footwear from flooding into the EU at a minuscule fraction of their production costs from 2014 to 2016, with some evidence from 2013.

They add this resulted in a “significant loss” of revenue from the collection of duties and taxes of other member states which the goods were then distributed to, with Spain, France and Italy taking the main brunt of losses and Poland and the Czech Republic making more marginal losses.

EU officers found false invoices valued the goods at five to 10 times lower than they should have been.

Due to UK customs’ alleged “continuous negligence”, the EU was deprived of £1.72bn in lost duty revenue, according to website Politico.

A total of £2.8bn in VAT was also denied to other EU countries because of the UK, OLAF found.

To get back some of the funds, OLAF has recommended the British Government should be forced to pay the £1.72bn directly into the EU budget by the European Commission’s Directorate-General for Budget.

Anti-fraud investigators told Politico: “These losses to the EU budget are still ongoing since this fraud has not been stopped to date.

“Despite repeated efforts deployed by OLAF, and in contrast to the actions taken by several other member states to fight against these fraudsters, the fraud hub in the UK has continued to grow.”

They said the UK had not yet opened any criminal investigation into the fraud scheme.

An investigation report, stated: “OCTOPUS therefore determined that significant value frauds were committed during customs clearance in the United Kingdom and were prolonged by non-payment of VAT in the countries of destination.

“Above all, the operation revealed that these large-scale frauds were the result of very organised organised circuits, extremely reactive and having an excellent knowledge of the faults of controls, logistic circuits, false invoice systems and clandestine financial flows.”

A spokesman for HMRC said the UK has an “excellent record in tackling fraud and rule breaking of all kinds, securing more than £26.6bn last year alone”.

He added they are “considering” OLAF’s findings and recommendations.

Operation OCTOPUS last year focused on the Kent port of Dover and Felixstowe on the Suffolk coast which are the two main entry points for Chinese textiles into Europe.

Using women’s trousers as an example, OLAF said they were declared with a value of 78p per kilogram, making the average price for a pair costing £24.30.

The market price of cotton is much higher at £1.25 a kilo.

“Phoenix” companies – which disappear and then pop up elsewhere – were set up by fraudsters to take delivery of the goods after they were trafficked to fellow members of the crime network across Europe.

Using women’s trousers as an example, OLAF said they were declared with a value of 78p per kilogram, making the average price for a pair costing £24.30.

The market price of cotton is much higher at £1.25 a kilo.

“Phoenix” companies – which disappear and then pop up elsewhere – were set up by fraudsters to take delivery of the goods after they were trafficked to fellow members of the crime network across Europe.

Read more – express.co.uk