UK facing £20m garlic tax bill

It is enough to take your (bad) breath away - an EU bill for millions of pounds in alleged unpaid duty on imports of garlic.

The UK Government has received a European Commission ultimatum to hand over £20 million within two months or face legal action.

The wrangle is over the fact that import tariffs on frozen garlic from outside the EU are lower than the rates for fresh garlic.

And, according to the Commission, UK authorities carelessly levied the lower rate applicable to frozen garlic on imports of the fresh product from China, in breach of EU customs rules.

A Commission statement explained: "Between 2005 and 2006, the UK customs authorities allowed imports of fresh garlic from the People's Republic of China under wrong authorising documents. They have erroneously stated that the goods imported were frozen garlic for which significantly lower import duties apply.

"The Commission considers that the UK authorities did not act with all due care when issuing the authorising documents and failed to collect the correct amount of duties. They are therefore held financially responsible for the loss of approximately £20 million to the EU budget."

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. One quarter of the total raised from such duties is held back by the national authority to cover collection costs.

This form of contribution to EU coffers makes up about 12% of the total annual sum submitted by the 27 national exchequers.

The Commission statement declared: "The Commission is determined to protect the common EU interest. Fair treatment of all member states must be ensured. If a member state fails to make available all the money it owes the EU budget, the other member states need to pay more as a result."

The error was uncovered during an inspection by staff from OLAF, the EU's anti-fraud unit, in July 2006.