Chief Secretary to the Treasury (): In March 2018, the European
Commission took the first steps towards infracting the UK,
alleging that between November 2011 and October 2017 the UK had
failed to prevent undervaluation fraud involving importations of
Chinese textiles and footwear. On 8 March 2022, the Court of
Justice of the European Union (CJEU) published its judgment,
finding against the UK on most liability points.
The UK has argued throughout the case that it took appropriate
steps to counter the fraud in question. However, since these
infringement proceedings were raised, the UK has taken
proportionate and increased steps to combat this fraud without
impacting legitimate trade, including by liquidating suspect
traders through enforcement action. The UK takes a comprehensive
and dynamic approach to tackling customs fraud risk and evolves
its responses as any new potential threats emerge.
Whilst the UK has now left the European Union and this is a
legacy matter from before our departure, the Government is keen
to resolve this long-running case once and for all and is
committed to fulfilling its international obligations.
Throughout this process the Government has also been conscious of
the risk of further protracted legal proceedings, which could
open UK taxpayers to not only a larger principal bill but also
continued substantial interest accrual. Considering this, in June
2022 the UK took the proactive step of making a payment of
€678,372,885.63, which the then Chief Secretary to the Treasury
set out in a statement to the House on 30 June (HCWS167). This
represented the minimum, indisputable amount the UK considered
due at that time in light of the CJEU judgment and vitally
stopped interest accruing on this portion of the bill.
Following further discussions with the European Commission, on 13
January 2023, the UK made a final principal payment to the EU of
€700,351,738.31. This constitutes the entire remaining principal
due and the figure paid reflects the 12.43% share back that the
UK is entitled to from its time as a Member State.
On 6 February 2023, the UK made a final payment to the EU of
€1,227,884,519.53, representing the interest due on the principal
amounts paid. These are substantial sums but represent the final
payments and draw a line under this long running case, with the
UK fulfilling its international obligations.
Now that the UK is no longer part of the EU’s customs union, we
do not have to remit any duties to the European Union, a tax that
in 2021-22 represented a £4.9bn contribution to the exchequer.
Outside of the EU, we can set our own law, including tax and
trade policies, that work for the UK. Furthermore, taking into
account the financial settlement with the EU, the Government has
determined how an additional £14.6bn of spending by 2024-25 can
be allocated to its domestic priorities, rather than be sent in
contributions to the EU. This additional spending was already
included in the overall spending plans that the Government set
out at previous Spending Reviews.
