The scam saw false invoices being used to allow textiles and shoes to be imported without tax being paid.
The EU anti-fraud office, OLAF, has accused the UK of ignoring rampant use of the fake invoices between 2013 and 2016.
OLAF said that it had ‘repeatedly drawn the attention of the UK customs authorities (HMRC) over the last years to the scale of the phenomenon and to the ongoing revenue losses.’
The country could now face a hefty fine.
“We recommended that the European Commission recovers the money from the United Kingdom,” said OLAF’s statement.
As customs duties go directly into the EU budget, the European Commission will now decide whether or not to seek recompense from the UK.
The scheme is said to have cost Germany, France, Spain and Italy some €3.2 billion euros in lost national sales tax revenue.
The fine would come at a sensitive time as the UK paves the way to divorce from the EU.