UK retail “least attractive in Europe” if tax-free shopping is axed, retailers warn

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Ted Baker The White Company Paul Smith Rishi Sunak tax-free shopping
Rishi Sunak is now facing renewed pressure to U-turn on a planned crackdown on VAT-free shopping for tourists
// Fashion retailers urge Rishi Sunak to make u-turn on decision to abolish tax free shopping
// Ending tax-free shopping could make the UK “the least attractive shopping destination in Europe”
// Up to £6bn will be lost to UK businesses due to a drop in tourist numbers and spending in key regions

Ted Baker, The White Company and Paul Smith have collectively written to the Chancellor urging him to reverse his decision to end tax-free shopping for tourists in the UK.

Rishi Sunak is now facing renewed pressure to U-turn on a planned crackdown on VAT-free shopping for tourists as the fashion retailers warned the move could be a “hammer blow” to the retail industry.

The move would also make the UK “the least attractive shopping destination in Europe”.


READ MORE: Retailers urge Chancellor to scrap plans to tax tourists


Moreover, other retailers such as Smythson, Rupert Sanderson and Hackett have also written in an open letter to the Chancellor that “fashion brands need our country to be open for business”.

“International shoppers will instead choose to spend their money in EU destinations where tax-free purchases are still available,” they wrote.

Last month, the Treasury launched plans to introduce a new rule that would stop overseas visitors from reclaiming VAT on luxury purchases in the UK.

It had said this would bring it in line with other systems after Brexit.

However, the plans have since been criticised by retailers as well as shopping destination Bicester Village, which warned over the fallout from such a rule change.

The Treasury responded to criticisms and said that international shoppers could post products home directly from retailers, and so recoup the tax.

The Centre for Economic and Business Research (CEBR) published a report into the cost of the Chancellor Rishi Sunak’s decision to end tax-free shopping from January 1, 2021, which has forecast a net loss for the Exchequer.

Up to £6 billion will be lost to UK businesses thanks to a drop in tourist numbers and spending in key regions such as London, Oxford, Edinburgh, Birmingham, Manchester and Liverpool.

The fall in tourist numbers could result in up to 138,000 manufacturing, retail and tourism jobs being scrapped.

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