UK’s Chinese garlic imports create tax stink for EC

The European Commission is taking the UK to court over a spat involving a £15m unpaid tax bill on imported garlic.

The row erupted after the UK mistakenly classified fresh garlic from China as frozen, which has lower import duties.

The EC is demanding compensation for the missing tax and taking legal action to recover it.

The roots of the row go back to 2005/2006 when an inspection by the European Anti-Fraud Office noticed the anomaly. The UK authorities were asked to explain why they had issued the wrong authorising documents.

The EC then began demanding compensation in January 2008 and launched legal action after the UK's ‘continued failure’ to pay. It launched an infringement procedure in 2010. Despite a Letter of Formal Notice and the Reasoned Opinion sent under Article 258 TFEU, the UK has steadfastly refusal to pay the amount at stake.

Customs duties, which are charged on imports of goods from non-EU states to the common market, are collected by all Member States on behalf of the EU. 75% of the amount collected is paid to the common EU budget. This traditional own resource makes up approximately 15% of the income of the EU budget. Member States retain 25% of the amounts collected to cover collection costs.

A spokesman for the EC, said: ‘Fair treatment of all member states must be ensured - if one member state fails to deliver on its obligation to collect the common resources of the EU budget, the other member states are forced to pay more as a result.’

All customs duties charged on imports of goods coming from a non-EU country are collected by member states on behalf of the EU and paid to the common EU budget as part of each member state's annual contributions. Member states keep 25% of the amounts collected with the rest being pumped into the EU’s coffers.

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