Britain owes the European Union budget two billion euros after turning a blind eye to a major scam by Chinese importers, the EU's fraud office said on Wednesday.
"We recommended that the European Commission recovers the money from the United Kingdom," the EU's anti-fraud office OLAF said in an email to AFP, confirming a report by Politico.
OLAF accuses Britain of ignoring rampant use of fake invoices and customs claims by Chinese importers which cost 1.99 billion euros ($2.1 billion) in lost customs duties to the EU.
The claim comes at a sensitive time in EU-Britain relations, just before London is to embark on Brexit negotiations in which the UK's exit bill -- estimated at 60 billion euros -- has already sparked sharp exchanges.
The UK government said it rejected the report and insisted Britain was tough on fraud.
"We don't recognize the figures and (the UK's revenue authorities) are looking at it now," a spokesman for British Prime Minister said.
The matter was "entirely separate and unrelated matter to the Brexit negotiations," he added.
An investigation by OLAF showed that between 2013 and 2016, fraudsters evaded customs duties by using false invoices and incorrect customs value declarations on imports into the UK.
OLAF said that "despite repeated efforts and in contrast to the actions taken by several other member states to fight against these fraudsters," the scam in Britain continued to grow.
The office said that the scheme also cost other EU countries -- such as France, Germany, Spain and Italy -- 3.2 billion euros in lost national value-added-tax revenue.
The fraudsters involved "are in fact organized crime groups whose actions affect the entire EU; they operate in criminal networks active across the EU," OLAF said.