UK retailers are in crisis mode as the government has made the decision to discontinue tax-free shopping for non-EU tourists, a move that has sent shockwaves through the industry. This decision, which will come into effect at the end of December, has been met with fierce opposition from retailers and industry bodies who warn of dire consequences for the economy.
The current VAT Retail Export Scheme allows shoppers from outside the EU to reclaim the 20% VAT on purchases made in the UK. However, the government’s decision to end this scheme has raised serious concerns about the UK’s appeal as a shopping destination for tourists from countries such as China, the US, Russia, and the Middle East.
Hopes that tax-free shopping for EU visitors would become available post-Brexit have been dashed, with the additional blow that the government plans to further restrict access to VAT refunds. This move is expected to exacerbate the challenges faced by the retail sector, already reeling from the impacts of the pandemic and Brexit.
Leading retailers like M&S, Harrods, Selfridges, and Bicester Village’s owners have joined major airports in urging the Chancellor to reconsider this decision. The cumbersome process of claiming tax refunds in the UK, coupled with the removal of the VAT refund system, is seen as a significant setback for the retail industry.
Anne Pitcher, MD of Selfridges, has voiced her concerns over the potential losses in visitor numbers and job cuts that could result from this decision. The impact of ending tax-free shopping for non-EU tourists is expected to be substantial, with billions of pounds in VAT refunds at stake.
Despite reassurances from the government that retailers can still offer tax-free shopping by shipping items to overseas visitors’ home addresses, the overall outlook for the retail sector remains uncertain. The widespread criticism of this move underscores the urgent need for the government to reconsider its decision and protect the economy from further harm.
In light of this development, retailers and industry bodies are calling on the government to rethink its decision to end tax-free shopping for non-EU tourists in order to avert a potential crisis in the retail sector and safeguard the UK economy.
Useful links relevant to the article: BBC, Financial Times.
