European Union blames Her Majesty’s Revenue and Customs (HMRC), a UK government department responsible for the collection of taxes in the United Kingdom, for failure to stop the Chinese criminal gangs who play down the prices for goods brought to Europe via UK ports, thus avoiding billions of pounds in VAT and customs duties.
The European Union will demand 2 billion euros ($2.17 billion) from the United Kingdom over the failure to settle customs fraud before the new post-Brexit trade arrangement, media reported Tuesday, citing senior EU officials.
According to The Times newspaper, the European Union blames Her Majesty’s Revenue and Customs (HMRC), a UK government department responsible for the collection of taxes in the United Kingdom, for failure to stop the Chinese criminal gangs who play down the prices for goods brought to Europe via UK ports, thus avoiding billions of pounds in VAT and customs duties. The move would reportedly hinder EU-UK relations, which are already complicated by Brexit.
“This fraud is still going on and Britain knows… It will come up in trade discussions and it will have an impact on the future customs relationship between the EU and Britain,” a source in the European Commission said, as quoted by the newspaper.
UK-based criminal gangs have doubled the amounts of goods delivered to Europe via UK ports over the last three years, for instance, the volume of clothes and shoes from China has increased from 192 million kilograms (423 pounds) in 2013 to over 400 million kilograms (882 pounds) in 2016, the 
The United Kingdom was reportedly chosen by the gangs due to the option to declare the imported goods with low added costs. Moreover, a total of 86 percent of the imported goods are at once re-exported to Europe by shadow companies, which later disappear without paying taxes, the newspaper specified.
In March, the United Kingdom officially began the withdrawal process by handing a formal letter to European Council President Donald Tusk. According to Article 50 of the Lisbon Treaty, London now has two years to complete all relevant negotiations.
UK Prime Minister Theresa May previously ruled out remaining part of the EU single market, which stipulates the free movement of people, but expressed her desire to reach a trade agreement with Brussels and allow for the freest trade of goods possible.