Major retail bosses join forces with Sadiq Khan to call for return of VAT-free shopping for tourists
Bosses of major British businesses, including The Ritz hotel and Harrods, have urged Chancellor Jeremy Hunt to restore VAT-free shopping for tourists.
The policy, which allowed foreign visitors to recover the tax paid on purchases, ended at the close of the Brexit transition period in December 2020.
Former prime minister Liz Truss was in favour of reintroducing it, but Mr Hunt said the scheme was ‘unaffordable’.
Political and business leaders are calling for its immediate reinstatement, together with airside tax-free shopping, to revive the ailing high street.
London mayor Sadiq Khan said it would help UK firms thrive ‘in a highly competitive international market’ and lines up with the Prime Minister’s ‘ambition to grow the economy this year’
Plea: Luxury stores like Burberry want the scheme to be revived
Former prime minister Liz Truss was in favour of reintroducing it, but Mr Hunt said the scheme was ‘unaffordable’
In a letter sent to the Treasury last night backed by executives from Heathrow Airport, Burberry and Selfridges, London mayor Sadiq Khan said it would help UK firms thrive ‘in a highly competitive international market’ and lines up with the Prime Minister’s ‘ambition to grow the economy this year’.
Firms say London is a ‘gateway’ for many tourists, with 20 per cent of tax-free sales made elsewhere in the UK.
Mr Khan wrote: ‘Our rich ecosystem of shops, hospitality venues, and cultural attractions, is heavily dependent on both domestic and international tourists.
‘That is why together, London’s business groups and I have repeatedly called on the Government to support the return of international tourists back to London, in what is a highly competitive international market, by reinstating tax-free shopping for overseas visitors and also extending this to EU visitors.
‘The return of VAT-free shopping would provide a much-needed boost to London’s retail and hospitality sectors at a time they need it most.
‘The Prime Minister has stated that his ambition is to grow the economy this year, and the Government should be looking for ways to secure the capital’s status and reputation as a global city that is open to visitors and investment – not providing reasons for tourists and businesses to look elsewhere.’
Mr Hunt’s predecessor, Kwasi Kwarteng, said tax-free shopping for visitors would help British businesses feel the full economic benefit of tourism.
However, the Chancellor said in October that ‘not proceeding with this scheme is worth around £2 billion a year’.
In March 2021 a cross-party group of over 60 MPs and peers called for the policy to be reinstated, citing independent research from York Aviation that suggested the move could increase passenger spend by between 20 and 30 per cent.