Member support urgently needed to overturn the Government’s decision to end tax-free shopping

The Government has announced that it will end the VAT Retail Export (tax free shopping) Scheme for visitors from all countries in the UK on 31 December 2020. This means that overseas visitors will no longer be able to obtain a VAT refund on items they buy here and take home with them in their luggage.

Please contact Walpole’s Director Charlotte Keesing on charlotte.keesing@thewalpole.co.uk and acting Head of Communications Tania Pearson on tania.pearson@thewalpole.co.uk with any supportive quotes and for further information.

It states: “The VAT Retail Export Scheme is a costly relief which does not benefit the whole of GB equally, with current use of the scheme largely centred in London. Retailers will instead continue to be able to offer VAT-free shopping, consistent with international principles of taxation, to non-EU visitors who purchase items in store and have them delivered direct to their overseas addresses.”

This is an unexpected and unwelcome announcement at a time when Britain’s luxury brands are trying to remain resilient in the ongoing Covid-19 crisis. Walpole is extremely concerned by the decision’s inevitable impact, not only in London and other key UK shopping destinations for affluent international visitors,  but also on the sector’s nationwide manufacturing hubs, where otherwise sustainable skilled employment will be affected by a further contraction in sales.

The Covid-19 crisis has already dramatically reduced numbers of international visitors to Britain, and other European cities,  and the removal of tax-free shopping for anyone visiting the UK will leave Britain at a profound competitive disadvantage post-Brexit.

Walpole CEO, Helen Brocklebank, said “International visitors are fundamental to the UK luxury sector’s recovery. Right now, the Government needs to be doing all it can to underline the allure of UK PLC and accelerating efforts to encourage affluent visitors to return to our shores rather than actively discouraging them with rulings like this. Globally famous brands like Burberry, Johnstons of Elgin, Harrods, Glenfiddich whisky and Hendrick’s Gin created a ‘jewel in the crown’ sector that was growing at nearly 10% each year before the pandemic, worth £48 billion to the UK economy. £4.5 billion in sales was generated by international visitors alone. The sector has been badly hit by the pandemic and sales in the capital are reported to be down by nearly 95% in some areas. These sales help to secure 160,000 highly skilled, sustainable jobs up and down the country. The lack of tax-free shopping will put those jobs at further risk. Paris ranks as number one destination for luxury shoppers, closely followed by London. We will have no chance of retaining that position or becoming number one unless this decision is reversed.”

Walpole will send a letter to the Chancellor today and has joined forces with New West End Company along with the British Retail Consortium (BRC)¸the Association of International Retail (AIR), and colleagues in retail, tourism and airlines across the UK to express our deep concern and shock over the decision to the Chancellor. We are working to secure press coverage as part of our campaign and would be very grateful if you could supply us with supportive quotes and potential media interviews where necessary.

Key messages to Government:

The British luxury sector is one of the UK’s success stories and can play a crucial role in helping to rebuild our economy and reinforce Britain’s reputation as a creative and cultural leader across the globe. Pre-COVID, it contributed £48 billion to the UK economy, and grew by 10% each year – more than double the growth of GDP, and employed over 160,000 people throughout the UK. Sales from international visitors were worth £4.5 billion.

This decision – which reduces the UK’s ability to remain competitive with Continental European countries – would be a disaster at the best of times, but comes at a time when the luxury sector is experiencing monumental challenges as domestic and international shoppers stay away and the country edges towards the changes brought by Brexit.

This decision will make the UK the only country in Europe not to offer tax-free shopping to international visitors.

London is the British luxury sector’s international shop window. The removal of tax-free shopping will not simply affect sales in the capital, it will have a knock-on effect on jobs throughout the UK and other shopping and hospitality destinations in all nations and regions.

Please contact Walpole’s Director Charlotte Keesing on charlotte.keesing@thewalpole.co.uk and acting Head of Communications Tania Pearson on tania.pearson@thewalpole.co.uk with any supportive quotes and for further information.
Please go here to read the Government statement.
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