The UK faces a potentially large payment to the EU after its top court ruled it had done too little to prevent fraud on Chinese clothing imports.
European judges said HMRC failed to pass on the correct amount of tax revenue on imports to the EU between 2011 and 2017.
The European Commission took legal action in 2018, arguing it was owed €2.7 billion (£2.4 billion).
The UK government said it would respond to the ruling “in due course”.
The UK has been accused of taking insufficient steps to prevent fraud after being warned of the problem by EU supervisor Olaf in 2017.
Olaf warned EU member states of the risk of undervalued clothing and shoes coming from China via letterbox companies.
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In a Tuesday ruling, the European Court of Justice (ECJ) upheld the Commission’s claim that the UK had failed to pay the correct amount of tax revenue to the EU.
However, it disagreed with how the commission calculated exactly what it was owed. The Commission must now recalculate a final claim.
EU members must pass on part of the taxes they levy on imports to the Commission as part of their contribution to the EU budget.
The BBC has asked the Commission for an opinion.
A UK Government spokesman said: “We have consistently argued that we took reasonable and proportionate steps to tackle the fraud in question and that the Commission materially exaggerated the scale and seriousness of the alleged fraud.
“The UK has always taken customs fraud very seriously and will continue to take it very seriously and evolve its response as new threats emerge.”
The UK severed formal ties with the EU in January 2021 after an 11-month transition period after officially leaving the EU.
However, the CJEU retains the power to rule on cases relating to how the UK applied EU law before Brexit.
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