Ending VAT-free shopping for international visitors can mean billions of pounds loss for the UK

Published on : Tuesday, September 22, 2020

Travel and retail bosses have warned that a government plan for ending VAT-free shopping for international visitors at the end of 2020 could cost the UK billions of pounds in lost income.


The heads of firms like Marks & Spencer, Heathrow and Selfridges said that this move has risked around 70,000 jobs.


Every year, £3.5bn in tax-free sales is made towards non-EU tourists. The Treasury said that the tax relief is pricey and susceptible to fraud.


Under the VAT Retail Export Scheme (VAT RES), international visitors to the UK can get back the VAT they pay on goods that are bought but not consumed in the UK.


This scheme benefits tourist hotspots like London and Edinburgh, as well as the famous Bicester shopping village in Oxfordshire, which attracts visitors looking for bargains.


However, earlier this month, the UK government said that it would do away with VAT RES on 31 December, with the ending of Brexit transition period, saying that it offered little benefit to many parts of the UK and was not in agreement with international norms.


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