A succession of retail and brand executives have come out against the UK government’s plans to end duty-free shopping in its current form for tourists in the New Year. And now Value Retail chief James Lambert is saying that the arguments the government is making for the logic of its decision just don’t stand up to scrutiny.
From January the UK will stop tourists from non-EU countries being able to claim back their 20% VAT at the airport on their homeward journey.
The government says this will bring the UK in line with “international norms”, even though it would make it the only European country opting out of the system. The government has also said duty-free shopping isn’t ending as shoppers who send their goods home rather than taking them home themselves will still be able to claim back the VAT.
But it’s this latter point that’s the issue for Lambert.
Value Retail operates Bicester Village, which is a magnet for high-spending tourists. Lambert told the Telegraph that there’s no appetite among shoppers from China or the Middle East for the government’s chosen VAT reclaim method.
He said not a single shopper out of the seven million visitors to Bicester Village last year posted their shopping back home. And he added: “We operate 11 villages around the globe and our experience is that typically, none of our guests make use of the ship-to-home option. Visitors who come to our villages enjoy the whole experience.”
The UK has been criticized for its method by which tourists reclaim their VAT for some years. Compared to other countries that have gone fully digital, the paper-based system in Britain is slow and causes long queues at airports.
The government has been under pressure from specialist duty-free shopping firms and other retailers to invest in a better system. But it seems to think it can sidestep this investment by removing the airport reclaim option.
The government has also said that its decision was subject to full consultation but this claim has been questioned.
The newspaper quoted Alan McLintock at the Chartered Institute of Taxation, saying that a government consultation had been misleading.
He said it indicated that the Treasury was considering extending the ability to reclaim VAT to EU passengers after we leave the bloc. “The whole steer and flavor of the consultation were about continuing on,” he said.