Pressure Continues to Restore Tax-Free Shopping

Michael Ward, Managing Director of Harrods and Chairman of Knightsbridge Partnership, has led a call from retailers to the Chancellor asking him to restore tax-free shopping.

In an article in the Mail on Sunday, Harrods, Selfridges, Mulberry and Heathrow Airport combined forces to call for an independent review of the full impact of tax-free shopping on the British economy and tax revenues.

Retailers pointed to the recent report by Oxford Economics, commissioned by the Association of International Retail (AIR), which concluded that rather than a £2bn annual cost the Treasury, reinstating tax-free shopping would see a net gain in taxes of around £350m each year once the full impact is taken into account.

Tax-free shopping was abolished by the Government when Britain left the EU on January 1st, 2021.  Following extensive lobbying led by the Association of International Retail, Kwasi Kwarteng’s short-lived Growth Plan proposed to reintroduce the scheme and extend it to include EU visitors.

The proposal was abandoned along with most other elements of the Growth Plan, by Jeremy Hunt in his November Budget.

Surveys undertaken by AIR and its members show that high-spending shoppers from the USA and Middle East are diverting their spending away from the UK and into EU countries where they can claim their VAT back.

In addition, UK residents can now shop tax-0free in the EU.  Early estimates suggest that over £500 million will be spent by Britons on tax-free shopping in Europe this year.  By ending tax-free shopping, Britain has lost the chance of reciprocal spending by EU citizens who outnumber British people be over seven to one.

“Britain is now the only country in Europe not to offer tax-free shopping” said Steve Medway, Chief Executive of Knightsbridge Partnership.  “We are already seeing hundreds of millions of pounds of spending by international shoppers being diverted from London to Paris and Milan.”

You can see the Sunday Mail article here

To learn more about the AIR Oxford Economic Report, click on the following links:

You can read the full Report here

You can read the Executive Summary here

You can read the AIR press release here

You can read the Red Box comment piece in the Times by Sir Geoffrey Clifton-Brown MP here