NEARLY £2million will be paid to Hoverspeed by Customs in an out of court settlement, after the company claimed over-zealous customs officials damaged its cross-Channel business.

The company, which pulled out of its Dover-Calais route, with the loss of 100 jobs last November, is to receive a sum of £950,000, plus costs of £850,000 from HM Revenue and Customs.

Hoverspeed launched the fight with Customs to the tune of £50million, in October 2004, claiming that heavy handed checks by officials, looking for illegal smuggling of cigarettes and alcohol, was costing it both customers and its reputation.

But a dispute between the company and Customs goes back four years. A June 2002 High Court case questioned the powers of Customs to stop and search travellers and how it interpreted EU guidance on questioning travellers bringing back goods.

A later High Court ruling in November 2002, found Customs had misinterpreted EU rules on establishing the burden of proof when travellers brought back goods from another EU member state. Customs since amended their legislation.

But since 2002, the fight continued. In 2003, passengers using Seacat services between Dover and Calais, were asked to fill in questionnaires asking how they had been treated by officers at the hoverport.

Questions asked included whether passengers stopped felt intimidated or threatened by the Customs officer.

A statement released by HM Revenue and Customs said the settlement was: "Not an admission of liability by HRMC."

It added: "This is a pragmatic outcome that takes proper account of what was recognised by both sides as being a highly complex and costly case if it were to have continued to trial."

Meanwhile, the name Hoverspeed could return to Dover under if management buy-out is successful.

Hoverspeed managing director, Geoffrey Ede, is reported to be leading attempts to buy the company and re-start the Dover-Calais service from the hoverport.