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World Ending tax-free shopping 'will devastate UK tourism'

03:25  21 september  2020
03:25  21 september  2020 Source:   bbc.com

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A government plan to end VAT- free shopping for international visitors at the end of the year could cost the UK billions of pounds in lost income, travel and It warned the UK will become the only European country not to offer VAT- free shopping for international visitors. This would hurt the tourism , retail

UK retailers, hoteliers and airport chiefs have warned the chancellor that scrapping tax - free shopping for international tourists has put 70,000 The move has caused a huge storm in retail and tourism circles with Marks & Spencer, Selfridges and the owners of high end designer outlet mall Bicester

Tammy Duckworth et al. looking at the camera © Getty Images

A government plan to end VAT-free shopping for international visitors at the end of the year could cost the UK billions of pounds in lost income, travel and retail bosses have warned.

In a letter to the chancellor, the heads of firms such as Marks & Spencer, Heathrow and Selfridges said the move also put 70,000 jobs at risk.

About £3.5bn in tax-free sales are made to non-EU tourists each year.

The Treasury says the tax relief is costly and vulnerable to fraud.

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Tax - free shopping means travellers leaving the UK or EU can get a VAT refund on goods they buy here and take home. It cannot be used for services. Find a shop that offers tax - free shopping . You have to be in the shop yourself when you buy the goods (although somebody else can pay for them).

Value-added tax (VAT) is a 20% sales tax levied on most goods in the UK . If you live outside the EU and you are travelling to the UK for leisure or business, you could be eligible for a VAT refund. The VAT-refund scheme is called the Retail Export Scheme or tax - free shopping .

Under the VAT Retail Export Scheme (VAT RES), international visitors to the UK can reclaim the VAT they pay on goods purchased but not consumed in the UK.

It benefits tourist hotspots like London and Edinburgh, as well as the famous Bicester shopping village in Oxfordshire, which attracts visitors seeking bargains.

But earlier this month the government said it would abolish VAT RES on 31 December, when the Brexit transition period ends, arguing it offered little benefit to many parts of the UK and was inconsistent with international norms.

  • UK 'could lose £60m a day' as tourism slumps
  • Chinese visitor slump hits Bicester Village

Critics say the Treasury fears that, under World Trade Organisation rules, the UK would also have had to extend the scheme to EU visitors after the transition period, creating an overwhelming administrative burden on the tax authorities.

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How does tax - free shopping work? When shopping , ask the retailer for a VAT 407 form. It’s important to note not all shops will participate in the scheme and some may have a minimum purchase price (often around £75). They may ask for proof you are eligible so bring a passport or national identity card.

You have tax - free allowances for Help us improve GOV. UK . Don’t include personal or financial information like your National Insurance number or credit card details. To help us improve GOV. UK , we’d like to know more about your visit today. We’ll send you a link to a feedback form.

The Association of International Retail (AIR), which co-wrote the letter, urged the chancellor to "look again at this devastating decision".

It warned the UK will become the only European country not to offer VAT-free shopping for international visitors.

This would hurt the tourism, retail and leisure industries at a time when they are "already reeling from the impact of Covid-19"

"Madrid, Milan and Paris are rubbing their hands with glee at this self-inflicted wound," said AIR boss Paul Barnes.

"If we charge a fifth more for the same goods, international visitors will not hesitate to switch their city breaks to other countries, and the stores and jobs will follow within months."

According to Visit Britain, international tourists spent £6bn on shopping in the UK in 2018. Of those transactions, £3.5bn were registered as tax free sales, although VAT was only reclaimed on £2.5bn.

'Tremendous disadvantage'

Thierry Andretta, boss of handbag maker of Mulberry which also signed the letter, accused the government of being "short-sighted".

"It will destroy the UK's ability to remain competitive with Continental Europe and... place us at a tremendous disadvantage, not to mention have a material impact on jobs and manufacturing in this sector."

A Treasury spokesman said: "We're making use of the end of the transition period to bring our personal duty and tax systems in line with international norms.

"This was subject to a full consultation, and VAT-free shopping is still available because retailers are able to offer it to overseas visitors who purchase items in store and have them sent directly to their home addresses."

Google Accused of Not Fixing 'Illegal Advantage' Competition Problems .
"Google is still in the mood that Microsoft once was, they think [they are] above the law," lawyer Thomas Höppner tells Newsweek.The research of over 10 billion search clicks, conducted by Lademann & Associates and commissioned by 25 comparison shopping sites, showed that under 1 percent of traffic using the shopping search site currently goes to competitors like Idealo or Kelkoo.* A judgment from the European Commission in 2017 fined Google a then-record €2.4 billion ($2.8 billion) for abusing its search dominance and using an "illegal advantage" in prioritizing its own shopping results.

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