Brexit negotiations could be put on hold until the UK settles a €2bn customs fraud fine with Brussels.

According to The Times, the European Union (EU) is concerned that the UK is not doing enough to tackle the import of undervalued goods which are entering the union through British ports.

A source from the European Commission reportedly said British officials are aware of this issue and that the loss of funds generated in customs duty will be part of the trade discussions during the Brexit negotiations.

Imported goods face a customs duty of 12 percent on their declared value. European officials believe that Chinese crime gangs are targeting British ports for the import of their goods because they can declare the value below the true worth of the goods and pay less duty.

As a result, crime gangs have been able to double the volume of fraudulent freight they ship into Europe through UK ports over the past few years.

The EU’s anti-fraud office, Olaf, believes that the money lost through customs fraud in this way amounts to billions of euros. As well, it said that despite “repeated efforts” to engage the HMRC in campaigns against fraud, suspect trade volumes through British ports continue to grow.

The European Commission is reportedly considering whether to bring formal infringement procedures against Britain, which could see the country having to pay €2bn in fines.

Chairwomen of the Commons public accounts committee, Meg Hillier, said she has asked the National Audit Office to investigate organised border crimes.

“HMRC needs to get on top of this because Britain is now seen by these crime gangs as the soft underbelly of Europe,” she said. “We have been concerned that HMRC has been slow to act.”

In addition, Hillier said that British businesses are suffering as a result of the fraud. “British businesses are being affected by this because they are being undercut by people who are not paying duties and taxes. It creates an unlevel playing field that hits British jobs.”

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