EU sends second warning to UK over customs duty shortfall

A combined United Kingdom and European Union flag flies outside the Palace of Westminster in London, Britain, June 28, 2018. REUTERS/Toby Melville

BRUSSELS (Reuters) - The European Commission said on Monday it had sent Britain a second warning to recover 2.7 billion euros (2.42 billion pounds) in customs duties it failed to collect on Chinese imports between 2011 and 2017.

The move is the second step in the EU’s legal procedure against EU states who do not respect the bloc’s rules and comes in a crucial phase of talks for Britain’s exit from the EU.

“The United Kingdom now has two months to act; otherwise the Commission may refer the case to the Court of Justice of the EU,” the Commission said in a statement. Financial sanctions could follow if the court upholds the Commission’s view.

The alleged scam was unveiled last year by the EU’s anti-fraud office OLAF. It said imports of Chinese textiles and other products into Britain were declared at an artificially low value to reduce the level of customs duties raised, with a resultant impact on the EU’s budget which is funded by such duties.

Britain has said it does not accept liability for the alleged losses or recognise the estimate of alleged duty evaded.

The EU executive arm decided last week to send the warning, but postponed the announcement to avoid interfering with Brexit discussions at an EU summit in Austria on Wednesday and Thursday, an EU official told Reuters.

Reporting by Francesco Guarascio; editing by Philip Blenkinsop