Retailers in the UK are urging for the swift reintroduction of VAT-free shopping for tourists, a scheme that was abolished at the beginning of 2021. The announcement in Friday’s mini-budget revealed that the scheme would be reintroduced and extended to EU visitors, but there were concerns that it would not be implemented until 2024. Prominent retail names, including Bicester Village, Heathrow Airport, and West End businesses, are now advocating for the plans to be brought forward in time for the King’s coronation in 2023.
The previous VAT-free shopping system attracted many non-EU tourists to shop in Britain, but it was considered cumbersome and paper-based. The government aims to reintroduce the scheme as an all-digital process, although this could potentially cause a delay of up to two years, according to the Treasury’s predictions.
However, retailers are confident that the implementation can happen much quicker than anticipated. With a significant number of tourists expected to visit Britain for the coronation next summer, it would be ideal to have the scheme in place by then. Companies like Vat-free shopping facilitator Planet suggest that ready-made digital systems already exist and have been successfully implemented in other major duty-free shopping markets worldwide.
Paul Barnes, head of the Association of International Retail, believes that the reintroduction of VAT-free shopping will make the UK one of the world’s premier shopping destinations. He states that this decision will attract non-EU visitors who may have preferred Paris or Milan, as well as EU shoppers who are unable to get their VAT refunded in other EU countries. Barnes emphasizes that the UK is now on equal footing with global shopping destinations and has become the most appealing place in Europe for Europeans to shop.
Barnes and other retail leaders plan to argue that a digital system can be implemented at no cost to the government within six months. The abandonment of VAT-free shopping for tourists was initially intended to recoup funds after the government provided extensive support to the country during the pandemic. Although the government estimates that reintroducing the scheme will cost £2 billion by 2026-27, the retail and hospitality sectors believe that the overall benefits, including increased tourism spending and boosted profits for various industries, will far outweigh this figure. Furthermore, the scheme is expected to generate job opportunities in retail, theaters, restaurants, and hotels.
Useful links:
1. Retail Gazette: UK retailers push for fast-tracking of VAT-free shopping for tourists
2. UK Government: VAT Retail Export Scheme for overseas visitors in the UK
