European anti-fraud investigators said that they had repeatedly warned British customs officials about the scale of the fraud but they had failed to take action.

Britain is facing a £1.7billion fine from the EU for allowing criminal gangs to flood European black markets with illegal Chinese goods in a move that will add to tensions surrounding Brexit negotiations.

The European anti-fraud office, known as Olaf, has accused British customs officials of failing to crack down on gangs using fake invoices to make false claims about the value of shoes and goods.

It claimed that France, Germany, Spain and Italy have lost a combined £2.7billion in VAT revenues because of the failures of British customs officials.

Downing Street said that it “does not recognise” the figures, which is described as an estimate rather than a bill, and said that the UK takes all allegations of fraud “seriously”.

The fine will add to tensions between Britain and the European Union ahead of Brexit negotiations, with ministers already disputing a £60billion “divorce” bill for the UK.

European anti-fraud investigators said that they had repeatedly warned British customs officials about the scale of the fraud but they had failed to take action.

A spokesman for Olaf said: “Despite repeated efforts deployed by Olaf, and in contrast to the actions taken by several other member states to fight against these fraudsters, the fraud hub in the UK has continued to grow.”

Bruno Collin, at the French National Directorate of Intelligence and Customs Investigation, told Politico that his British counterparts had failed to respond to concerns.

He said: “UK authorities are not interested at all in cooperating in this field, probably because the phenomenon does not directly affect them.” Politicians opposed to Brexit said the findings raised more questions about the government’s plans to quit the EU’s customs union.

“The UK border force is asleep at the wheel and it’s going to cost the taxpayer billions,” said Alistair Carmichael, a Liberal Democrat MP.

“This doesn’t bode well for reckless plans to leave the customs union and set up border checks for all goods coming into UK.”

The decision over whether to fine the UK will be taken by the European Commission.

HM Revenue and Customs said it had an “excellent record in tackling fraud and rule-breaking of all kinds” and was considering Olaf’s findings and recommendations.

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