Image copyright Getty Images Image caption Goods can be transported all over the EU once they have passed UK customs

Systematic failures by UK customs officials have allowed criminal gangs to defraud the European Union of at least £2bn in just four years plus billions more in lost VAT, the EU anti-fraud office OLAF has claimed.

Olaf said failures by Customs and Excise had cost at least 5.2bn euros (£4.5bn) in lost duties and VAT.

The losses relate to clothing and footwear exported mainly from China.

An HMRC spokesman said its experts did not recognise OLAF's estimates.

As a result it planned to challenge them, he added.

Ernesto Bianchi, investigations director for OLAF, said: "In the last year we have seen a concentration of the fraud pattern and we have calculated that roughly 79.9% of the losses in customs duties are made through declarations made in UK ports.

"These are estimates, of course, because the fraud is perpetrated by a particular type of scheme where the companies actually disappear."

The EU may order the UK to pay back the lost customs duties, estimated at about 2bn euros (£1.7bn).

Image caption The EU's anti fraud Bureau is frustrated by the lack of action by HMRC

OLAF says almost 80% of the illicit traffic in goods passes into the single market through the UK, mainly the ports of Dover and Felixstowe.

Often shipments arriving in Hamburg will be transported to Dover so they can be declared for customs in the UK.

The goods are then transported all over the EU once they have passed UK customs.

OLAF accuses HMRC of failing to use a risk analysis system used by other European customs departments to detect fraud, despite it having raised the issue at four separate bilateral meetings with senior UK tax officials in recent years.

During a special Brussels-based operation in 2014, HMRC used the system to detect under-declaration of customs values totalling about £400m in just four weeks.

However, the UK was unable to recover the lost duties and has failed to adopt the methodology since then.

Image copyright Neven Juretic Image caption Clothes and shoes can be bought from wholesale retailers in China then exported to the UK

British businesspeople are concerned and say they believe criminal gangs operating in the UK are also based in China. They also fear that Chinese racketeers own and run many of the so-called fulfilment houses - the huge warehouses used to hold imported goods in Europe.

They are angry that the same Chinese importers are evading VAT as well as under-declaring the value of goods at customs.

Richard Allen, from the business pressure group Retailers Against VAT Abuse (RAVAS), says his members had gathered plenty of hard evidence of widespread tax avoidance by Chinese criminal rackets.

"We were approached by a European police force who had impounded a large volume of goods from China and they told us that the freight forwarder, and the warehouse that was holding the goods in the EU were involved and they were Chinese-owned.

"So it seems to be a very professional set-up. It seems to be that they have found an Achilles' heel in that the UK is a weak spot.

"Once you bring this stuff into the EU you can sell it to any member state and it will not go through any other customs checks."

Image caption Operators who avoid paying VAT can undercut legitimate businesses

Many fear the current level of fraud actually detected is just the tip of the iceberg.

Neven and Roni Juretic set up business selling tablet and smartphone covers online. In just seven years, their company has paid £750,000 in VAT.

By evading tax, they say the Chinese racketeers were able to undercut their business. A monthly turnover of £60,000 fell by more than two-thirds virtually overnight forcing the couple to sack staff and give up their own warehouse.

Mr Juretic says the business has recovered since then by specialising in higher quality items.

"This is a complete and utter failure by HMRC to detect the fraud and to work out that goods are being declared at a small percentage of true value when that can be so obviously detected if they used the right methods," he says.

"They're also allowing VAT-evading sellers to warehouse stock in the UK without taking any action against them, so add those two together and you've got a huge hole in the UK economy."

Richard Murphy, an accountant who has long campaigned against tax evasion, blamed the failures on cuts in HMRC staff following a big departmental merger in 2005.

"We saw a complete change in the mentality of the organisation," says Mr Murphy.

"They aren't even training staff to be fully qualified tax inspectors any more. So the staff they've got are not as well trained and they're being concentrated in fewer and fewer offices - many of which are away from ports."

HMRC declined to answer the points made by Richard Murphy, the businesspeople and OLAF.

A spokesman said there would be no further comment while the OLAF figures were being challenged.

Andrew Hosken reports for BBC Radio 4's The World Tonight programme.