MPs demand evidence for ending duty free sales

Retailers urge the Chancellor to reverse the decision to remove tax perks for overseas visitors buying luxuries in the UK

The Treasury Committee has written to Rishi Sunak to demand the evidence behind the Treasury’s decision to abolish duty free shopping for overseas visitors. 

Its chairman Mel Stride has asked the Chancellor for the cost analysis of the VAT overhaul. 

The move comes after an evidence session this week that raised concerns about the clarity of the consultation process when stakeholders were asked for their input, as well as calls from retailers to reconsider the move. 

Mr Stride said MPs on the committee have been told the move will be a major blow to many retailers serving the struggling tourism sector: “It could be seen as the UK imposing a tariff on its own exports.”  

In the letter, he wrote: “An announcement of this nature would usually be made at a fiscal event and would be published with the accompanying costings.”

The move will stop overseas visitors from reclaiming VAT on luxury purchases in the UK. Buyers can apply for a refund in airports before departure, but once the rules change next year this will no longer be possible.

The Treasury has said that visitors could instead recoup the tax by posting the products home directly from popular shopping centres, but retailers have said few people chose to do so.

The overhaul is part of Number 11’s plan to bring the tax relief in line with other systems post-Brexit. 

In a letter to MPs last week, James Lambert, boss of Bicester Village owner Value Retail, said: “The British retail and tourism industries are already struggling to recover from the impact of coronavirus and as we look to rebuild, this is an unnecessary additional challenge.

“Beyond that, this change will also harm the wider economy and cost people their jobs.”