CAMPAIGNING lawyers have threatened to sue HM Revenue and Customs over complicity in illegal Israeli settlement trade.

A letter from the non-profit legal group Global Echo Litigation Center alleges agricultural goods in areas like the occupied West Bank have entered Britain in violation of trade rules.

This is happening by produce being labelled as from Israel either by being mixed with Israeli goods, by using a settlement postcode but erroneously saying the country is Israel, according to the July correspondence, Sky News reported.

It is also allegedly happening by way of a “sham” proxy address within Israel, claimed the letter from Leigh Day legal firm.

Settlement imports are supposed to be subject to tariffs, while Israeli products get preferential tax treatment and mostly enter Britain levy-free.

The letter accused the HMRC of a failure to determine the true origin of the imports, citing a four-year investigation by the centre.

It suggested HMRC processes to verify the origin of Israeli products were “flawed” and have meant settlement products unlawfully benefitted from preferential tax treatment.

It claimed five companies, identified from 357 invoice declarations, regularly source agricultural products from settlements but declare the origin as Israel.

Global Echo also said that it had obtained documentary evidence suggesting a “widespread, systemic issue of origin obfuscation occurring across Europe and specific instances of misleading statements of origin occurring in the UK.”

In a report from the organisation in June, it said that one in six shipments it investigated contained agricultural products originating in settlements in occupied Palestine and the Syrian Golan Heights, at least 42 per cent of which had been mislabelled as Israeli-grown.

The Global Echo has called on HMRC to view imports said to come from Israel as high risk, which would require HMRC to “take reasonable steps” to ensure compliance.

It urged the HMRC to put in place arrangements to closely scrutinise future claims from exporters of entitlement to preferential treatment based on items originating in Israel.

It also asked that it review verification processes to ensure risk and intelligence-based enforcement for all Israeli agricultural imports.

The tax agency said that the letter was not a formal written notice and did not identify a specific HMRC decision which would be subject to a legal challenge by Global Echo.