The Government has announced that tax-free airport shopping is to be scrapped from January 2021. And no longer will VAT be able to be recouped by overseas visitors to popular tourist retail sales attractions across the country.
The unexpected move also contradicts the benefits of the Treasury decision to extend duty free sales on alcohol and tobacco for travellers to the EU post-Brexit. Switzerland already has that concession.
With the airline industry facing its greatest crisis in its short history, and London the worldwide hub (or was), some 35 businesses and operators across the UK airport sector have come together to urge the Government to reconsider.
According to a York Aviation’s economic impact assessment of the decision, the loss of the VAT airside concession alone will cost the UK economy £2.1bn in Gross Domestic Product (GDP) and will put 19,400 jobs at risk nationally, should the Government push ahead with what the UK Travel Retail Forum (UKTRF) calls “an ill-informed measure”.
Speaking on behalf of UKTRF members the Chair, Francois Bourienne, said: “This decision puts the UK out of step with travel retail systems around the world, completely disincentivises tourists to visit the UK and British passengers making purchases as they go on vacation abroad, and puts UK airports and travel retail at a substantial disadvantage against their European counterparts after Brexit.
“It may well be the best gift the UK could have given the EU as well as a massive blow for UK Plc and we are dismayed at the lack of industry consultation before this decision was reached.”
The Treasury said that shoppers could instead recoup the tax by posting the products home directly from shopping centres such as Bicester Village, a comment refuted by James Lambert, a director of the enterprise, “Not one of our seven million visitors last year posted their shopping back home,” he said.
Heathrow, Dufry and Global Blue have formally launched judicial review proceedings against the Government over this decision. The Association of International Retailers and the UK Travel Retail Forum are also working closely together to fight the Treasury action. Will the “Duty Free” signs have to be taken down, the UK possibly the only country in the world not offering this facility?
From a Department of Transport point of view the oft repeated reprise is that it is decision of HMRC, although one would assume it is discussed at Cabinet level.