The UK undervalued fashion imports from China when it was in the European Union, causing a huge loss to the bloc of €2.7 billion euros.
RTE Europe Editor Tony Connelly revealed the European Court of Justice ruling that UK customs authorities “failed to properly check undervalued imports of textiles and footwear from China when the UK was a member state.”
“The loss to the EU in missing customs revenue was €2.7 billion,” Connelly tweeted.
He said: “The €2.7 billion was calculated by the European Commission.”
He added: “The ECJ approves the Commission’s method used to estimate the amount of customs revenue losses for part of the infringement period, since that method has proved to be sufficiently precise and reliable to ensure that it does not lead to a clear overestimate of the amount.
“The ECJ says it’s up to the Commission to calculate the precise amounts of revenue payable by the UK taking account of today’s ruling.”
Reactions
In response to the news revealing a waste of time resources on the European side as well, one Twitter user suggested there is “no wonder the EU needs border controls” in the light of Brexit.
Another user pointed out the UK government’s much more thorough response to Ukrainian refugees fleeing the war with Russia and being made to apply for a British visa to be able to seek asylum in Britain.
“But when it comes to checking actual people fleeing an actual war,” the user said.
‘If you under-declare, it means you underpay taxes’
Meanwhile, Dr Anna Jerzewska, who used to trade before Brexit and is now founder of an international trade consultancy said the ruling is a “very good reminder of how complex customs issues can be” – just as Brexit is complicating them for the UK when trading with the EU, which it is no longer a part of.
“Customs valuation is one of the 3 core areas of customs. Together with classification and rules of origin,” Jerzewska explained.
She added: “Customs value is basically the value of products you declare to Customs at import. It matters as customs duties, import VAT and other taxes are calculated as a percentage of the customs value.
“If you under-declare it that means you end up underpaying taxes. If you over-declare, you pay more than you need to. So how to know what value to declare?
“There are some rules. Six of them to be precise.”
She said in the majority of cases, the transaction value is the method used, which she said is the “price paid or payable by the buyer to the seller for the goods when sold for export with some adjustments.”
She added: “Sounds simple? It’s not. In practice, there is so much that needs to be clarified or is subject to interpretation.
“This is not a comment on the case/verdict, just a reminder for companies out there that valuation can be tricky. Because of the adjustments, companies need to work closely with their agents to arrive at the final value. Often post-importation corrections are necessary.
“It’s crucial to review the final value submitted to Customs and check that all the possible subtractions have been made and additional values included. As always, as a company, you’re liable and it’s your responsibility to ensure the final value is correct.”
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