BRUSSELS—British officials said they would contest a claim by the European Union’s antitrust watchdog that the country owed more than $2 billion after failing to charge enough customs on Chinese goods.

The EU’s anti-fraud office said British officials haven’t taken sufficient steps to stop a “major pattern of customs fraud” between 2013 and 2016 in which Chinese imports of textiles and shoes were undervalued in customs declarations.

The disagreement comes as Prime Minister Theresa May prepares to formally launch negotiations over the U.K.’s divorce from the EU, expected some time before the end of the month.

The agency, called OLAF, said there have been repeated warnings to the U.K. to tighten its customs efforts. Because of its inaction compared to other EU member states, the agency said, “the fraud hub in the U.K. has continued to grow.”

In the EU, customs duties on goods are collected on behalf of the bloc at the point of entry, while value added taxes are levied by the government of the country in which the goods are sold.

OLAF said it recommended to the European Commission, the EU’s executive arm, that the U.K. be required to repay €2 billion ($2.11 billion) in lost revenue. The Commission, noting OLAF’s independence, declined to comment on the investigation.

The Commission always follows up on OLAF recommendations but sometimes reaches a different conclusion about the amount of money owed. The Commission decision usually takes a few months.

The potential repayment was first reported by Politico’s European edition.

A spokesman for the Her Majesty’s Revenue and Customs said the U.K. would challenge the OLAF estimate of how much duty was evaded. The agency also took issue with OLAF’s contention that its enforcement had been lax, noting it is investigating some 550 cases of import fraud.

“HMRC has a very strong track record for tackling fraud and rule breaking of all kinds, securing more than £26.6 billion last year alone and no one should be in any doubt that we are responding to the threat of fraud,” the spokesman said.

The OLAF investigators also said they discovered an effort by Chinese exporters to avoid paying value-added tax in various European countries. As a result of utilizing British ports, OLAF said other EU countries had lost out on €3.2 billion of tax revenue they would have otherwise have earned from VAT between 2013 and 2016.

OLAF faulted the British government for not investigating the fraud networks or adopting reforms recommended by the agency.

The investigation’s findings come at a contentious time, not just because of the U.K.’s impending exit from the EU, but also due to renewed debate over global trade and what measures governments should take to protect their manufacturers and raise barriers to low-cost goods from China.

For the most part, Britain, which generally supports free trade policies, has been skeptical of raising EU defenses against Chinese imports that are sold far more cheaply than goods made in Europe. Others within the EU say more must be done to enforce existing rules to prevent the so-called dumping of goods into the EU’s shared single market.

After Brexit, the U.K. government has said it would leave the EU’s single market and customs union, meaning that customs checks would have to be established between the U.K. and rest of the EU.