EU demands UK pay two billion euros in tax compensation

The European Union will demand compensation from the UK for two billion euros in damages caused by the British authorities' inability to combat customs fraud while waiting for a new post-Brexit trade deal, - The Times reported, citing a senior official.

The EU believes that HM Revenue and Customs (HMRC) has failed to stop criminal gangs, mainly from China, from undervaluing goods imported into the EU through the English cities of Dover and Felixstowe, failing to pay billions of pounds in customs duties and VAT, according to sources.

"The fraud is still going on and the UK knows (about this). It will come up during trade negotiations and affect the future customs relations between the EU and the UK," the newspaper quoted a source in the European Commission as saying.

The newspaper cited official figures showing that criminal gangs have doubled the volume of goods smuggled into Europe from British ports. The volume of illegal clothing and footwear from China rose from 192 million kilograms in 2013 to more than 407 million in 2016.

Criminals choose the UK for the opportunity to reduce the price of their imports. 86% of these are immediately brought into Europe, often through shell companies that disappear before the VAT deadline.

"It may be the EU budget that takes the biggest hit, but this affects UK companies too, because those who don't pay import duties and taxes are cutting prices," the publication quoted Meg Hiller, chair of the Community Institute's Treasury Committee.

According to Sputnik