Elimination of tax-free shopping 'will ruin UK tourism'

The government's plan to end VAT-free shopping for international visitors by the end of the year has cost the UK billions of pounds in revenue, travel, and retail owners have warned.

Elimination of tax-free shopping 'will ruin UK tourism'

In a letter to the chancellor, the heads of firms such as Marks & Spencer, Heathrow and Selfridge said the move also threatened 70,000 jobs.

About 3.5 3.5 billion in tax-free sales are made each year for non-EU tourists.

The Treasury says tax breaks are expensive and there is a risk of fraud.

Under the VAT Retail Export Scheme (VAT RES), international visitors to the UK can reclaim the VAT they pay on goods purchased but not used in the UK.

In addition to tourist hotspots such as London and Edinburgh, it also benefits the popular Bicester shopping village in Oxfordshire, which attracts bargain-seeking visitors.

But earlier this month the government said it would abolish the VAT RES on December 31, when the Brexit transition period ends, arguing that it did little good for many parts of the UK. And it is against international norms.

Critics say the Treasury fears that under World Trade Organization rules, the UK would also have to extend the scheme to EU visitors after the transition period, putting a heavy administrative burden on tax authorities.

The Association of International Retail (AIR), which co-wrote the letter, urged the Chancellor to "reconsider this disastrous decision."

He warned that the UK would become the only European country not to offer VAT-free shopping to international visitors.

This will hurt tourism, retail and entertainment industries at a time when they are "already under the influence of Covide-19".

"Madrid, Milan and Paris are happily shaking hands on this self-inflicted wound," said ERK boss Paul Barnes.

"If we charge a fifth higher tariff for the same goods, international visitors will not hesitate to change their a city break to other countries and stores and jobs will be found in months."

According to the UK tour, international tourists spent $ 6 billion on shopping in the UK in 2018. Of those deals, b 3.5 billion were registered’ as tax-free sales, though only AT 2.5bn was subject to VAT.

'Severe damage'

Thierry Andretta, the owner of Mulberry's handbag maker, who also signed the letter, accused the government of being "short-sighted".

"It will destroy the UK's ability to compete with Continental Europe and ... it will do us a great disservice, not to mention the material impact on jobs and readiness in this sector."

A Treasury spokesman said: "We are using the end of the transition period to bring our personal duties and tax system into line with international norms.

"It was subject to a full consultation and VAT-free shopping is still available because retailers can offer it to overseas visitors who buy items in the store and send them directly to their home address.”


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