EU to demand customs fraud solution in Brexit negotiations

The UK government must agree to a deal to prevent large-scale customs fraud being routed from China via Britain as part of any Brexit trade deal, according to newspaper reports.

UK tax authorities are not acting sufficiently against Chinese groups which undervalue imports so as to avoid paying billions in taxes, Brussels sources told The Times.

Large shipments of clothing and other products arrive to Britain from China every year before making their way to several other European countries, leading the bloc to raise concerns about the avoidance of large amounts of tax.

EU member states will vote later this week in order to set out its "red lines" for the negotiating teams in the lengthy process.

One of these will be to settle a demand for €2bn from the customs fraud.