The European Court of Justice (ECJ) agreed with the European Commission (“the Commission”) Tuesday in ruling that the UK violated EU law by failing to apply effective customs control measures and owes the EU billions for failure to collect import fees in respect of certain imports of textiles and footwear from China.

Some countries listened to the warnings about risk of fraud from EU Fraud Agency, the OLA. However, the ECJ ruled that the UK failed to put in place measures to deal with fraud, thud failing to fulfill their custom collection obligations. The complaint emerged in 2017, where it was found that the UK failed to collect the correct customs duties and VAT on Chinese imported goods. Under the Brexit agreement, the UK remains bound by EU law for cases occurring when the UK was a member state, and therefore the Commission brought the case to the ECJ from 2018, to require the UK to pay $2.7 billion in compensation due to the failed obligations.

However, the court found that the calculation of commission losses were too excessive and therefore was instructed to recalculated the losses based on the recommendations of the judgment. The UK was further accused in court proceedings of not providing sufficient information to allow the Commission to calculate how much money was owed.

Whilst there has been no public comment from the UK Government, a spokesperson has challenged the decision that the UK have taken “reasonable and proportionate steps to tack fraud,” and the “size and severity” of the alleged fraud was overstated by the Commission.