UK retailers, tour operators and airport operators are seeking legal advice after the “body hit” of the government’s decision to abolish the VAT cuts for overseas visitors.
Last week, the Treasury Department announced plans to withdraw its VAT retail export plan for non-EU visitors after the Brexit transition period ended on December 31st. This allowed out-of-block visitors to claim a VAT refund on items purchased. I took it home from England.
Businesses in tourist-heavy areas such as London’s West End, and other cities and retail centers such as Oxfordshire’s Bicester Village have benefited from this plan. They hoped to expand to EU visitors next year to attract people who spend a lot of money on the UK.
On Friday, the Treasury Department will withdraw existing remedies for all visitors, making the UK the only country in Europe that does not offer duty-free shopping to overseas visitors, according to the New West End Company, a partnership representing 600 retailers in London. Restaurant and hotelier.
Overseas visitors make up about half of the West End, but spending is disproportionate, the group said.
Retail centers such as Oxfordshire’s Bicester Village have benefited from this plan. © Eye35.pix / Alamy Stock Photo
Jace Tyrrell, Chief Executive Officer of the New West End Company, described it as a “disastrous” decision that “kills all urban recovery”. The group said it is getting legal advice on how the decision was made, which has been supported by a wide range of businesses in the leisure and aviation sectors.
Tyrrell said the decision was “a big blow to the UK economy.” Rather than showing the UK can do business after Brexit, he said it would encourage foreign visitors from places like the Middle East and Asia to spend money.
The New West End Company calculated that the UK’s withdrawal from the EU would result in a £2.1 billion duty-free shopping bonus leading to a £3.5 billion tax-free sales loss.
“This hit the UK economy by £5.6 billion even before it negatively impacted wider international tourism spending at a time when retail and tourism across the UK was already hitting.
“This decision has a huge negative impact on the UK’s tourism industry, hitting hotels, restaurants and cultural attractions across the UK as high-cost tourists instead choose European countries other than Paris, Rome or the UK.”
The group said, “Not only will the Ministry of Finance save anything, but the inevitable reduction in the number of international tourists and spending in the UK will reduce all other VAT revenues.” The total annual expenditure of overseas visitors is over £22bn, of which a tenth goes to duty-free shopping.
Overseas visitors account for excessive spending in London’s West End. © Mike Kemp / In PIctures / Getty Images
The Treasury Department said the VAT retail export plan was “an expensive remedy that is not equally profitable for the GB as a whole, with the scheme currently used around London.”
The retailer insisted that it meant that they didn’t actually need to travel to the UK, but said that VAT-free shopping is still possible for goods shipped directly to an overseas address.
The Ministry of Finance said, “We are using the end of the transition to align our personal obligations and tax systems with international norms.”
Joss Croft, CEO of UKinbound, representing UK tourism, described it as “another nail of the global British pavilion”. He added, “Repealing this plan is a shortsighted action that has a negative impact on the UK economy and undermines global competitiveness.”
On Friday, the Treasury Department explained that it was “a great help to the airport” by expanding duty-free shopping, which primarily focuses on selling cigarettes and alcohol for travelers traveling from the UK to the European Union.
However, airport operators warned last week about the impact of goods like electronics and clothing on non-EU foreigners about the impact of another decision to stop duty-free sales in January at airports, ports and Eurostar terminals.
The aviation sector wanted the tax exemption rules applicable to passengers traveling to the EU to apply.
Karen Dee, chief executive of the Airport Operators Association, said the government “has once again shown a complete lack of awareness of jobs and businesses in the aviation sector.”
She added: “Our industry is overcoming the worst crisis in civil aviation history. You can’t afford another hammer hit like this. By removing Airside’s legal concessions, the government is unnecessarily undermining the revenues of retailers and airports.”
Further reporting by Peter Foster
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